Question

how can i solve it with finanical calculator

Alya is 32 years old now and she is planning to deposit into her retirement fund a fixed amount at end of every month till she turns 68 (after 36 years). Then, she is planning to withdraw, $2924 at the end of each month until she turns 97 (after another 29 years). If return on her retirement fund is 0.8% monthly, how much she has to deposit monthly into retirement fund during first 36 years? she has to deposit $ monthly during first 36 years (Round to the nearest cont.)

how can i solve it with finanical calculator

Answer 1

Calculation of monthly deposit for the retirement fund:

1. First, we need to find what should the value of the retirement fund that she should have accumulated at the end of 36 years, so that she can withdraw 2924 dollars every month for 29 years. Return on retirement fund = 0.8%

Steps in financial calculator:

i. Press 2ND button and FV button (To clear TVM)

ii. Type '2924', then press PMT; type '0.8', then press I/Y; type '29*12=', then press N; type '0', then press FV

iii. Press CPT, then PV button. The screen will show 'PV = -342,663.8857'. Hence the value of retirement fund after 36 years has to be 342,663.89 dollars

2. To accumulate 342,663.89 dollars after 36 years how much has to be deposited every month for 36 years? This will be the next part of our calculation.

Steps in financial calculator:

i. Press 2ND button and FV button (To clear TVM)

ii. Type '342663.8857', then press FV'; type '0.8', then press I/Y; type '36*12=', then press N; type '0', then press PV,

iii. Press CPT, then PMT button. The screen will show 'PMT= -90.600333'.

Hence Alya has to deposit 90.6 dollars every month for 36 years to the retirement fund to draw 2924 dollars every month after 68 years until 97 years.