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Suppose you want to have $800,000 for retirement in 20 years. your account earns 5% interest compounded monthly.
a.how much would you need to deposit in the account each month? $
b.how much interest will you earn?

Respuesta :

Aliwohaish12
The formula of the future value of an annuity ordinary is
Fv=pmt [((1+r/k)^(kn)-1)÷(r/k)]
Fv future value 800000
PMT monthly payment?
R interest rate 0.05
K compounded monthly 12
T time 20 years
Solve the formula for PMT
PMT=Fv÷[((1+r/k)^(kn)-1)÷(r/k)]
PMT=800,000÷(((1+0.05÷12)^(12
×20)−1)÷(0.05÷12))
PMT=1,946.31 per month

Interest earned
800,000−1,946.31×12months×20 years
=332,885.6


Hope it helps!
anthougo

a. If you want to have $800,000 in your retirement account in 20 years' time, you need to deposit $1,946.31 each month.

b. You will earn a total interest of $332,884.98 at the end of 20 years.

Data and Calculations:

N (# of periods) = 240 (20 x 12)

I/Y (Interest per year) = 5%

PV (Present Value) = $0

FV (Future Value) = $800,000

Results

Monthly Deposit = $1,946.31

Sum of all periodic payments = $467,115.02

Total Interest = $332,884.98

Thus, you need to deposit $1,946.31 every month in the account.to have $800,000 in the retirement account in 20 years' time.

Learn more: https://brainly.com/question/14946649

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