Question
Asked Oct 28, 2019

Suppose you want to have $300,000 for retirement in 20 years. Your account earns 7% interest.

a) How much would you need to deposit in the account each month?

$

b) How much interest will you earn?

$

check_circleExpert Solution
Step 1

According to the given information:

Amount earned after retirement PN=$300,000

Time (n) = 20years

Rate of interest (r) = 7%

The amount to be deposited in the account each month can be calculated using the formula:

nk
d1+
-1
k
PV
k
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nk d1+ -1 k PV k

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Step 2

Now put the values in th...

(20(12)
-1
0.07
d1+
12
300000
0.07
12
d(1+0.00584)0-)
240
300000
0.00584
d(1+0.005840-
300000
0.00584
d(4.04516-1)
300000
0.00584
300000 d(521.432)
300000
d
521.432
d 575.3386
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(20(12) -1 0.07 d1+ 12 300000 0.07 12 d(1+0.00584)0-) 240 300000 0.00584 d(1+0.005840- 300000 0.00584 d(4.04516-1) 300000 0.00584 300000 d(521.432) 300000 d 521.432 d 575.3386

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