You start saving for retirement at the age of 25. You want to have $1 million when you retire in 42 years. You invest in a savings plan that earns 6%. Compound monthly. How much should you deposit each month? M =(12)(1 + 2)"21. You start saving for retirement at age 25. You want to have$1 million when you retire in 42 years. You invest in asavings plan that earns 6%, compounded monthly.a. How much should you deposit each month?b. Suppose you wait until you are 30 to start saving. How muchmore do you have to deposit each month compared to theamount in part (a)? 172.22

a) If starts at age 25: This is the case of Future value of Annuity Future value of Annuity = PMT *…

You start saving for retirement at the age of 25. You want to have $1 million when you retire in 42 years. You invest in a savings plan that earns 6%. Compound monthly. How much should you deposit each month?

You start saving for retirement at the age of 25. You want to have $1 million when you retire in 42 years. You invest in a savings plan that earns 6%. Compound monthly. How much should you deposit each month?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 9PROB

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Question

M =
(12)
(1 + 2)"
21. You start saving for retirement at age 25. You want to have
$1 million when you retire in 42 years. You invest in a
savings plan that earns 6%, compounded monthly.
a. How much should you deposit each month?
b. Suppose you wait until you are 30 to start saving. How much
more do you have to deposit each month compared to the
amount in part (a)? 172.22

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