You want to be a millionaire when you retire in 40 years. How much do you have t

Q: You want to be a millionaire when you retire in 40 years. How much do you have t

let x be the savings per month => a) x * [(1+10.8%/12)^480 -1]/10.8%/12 = 1000000 => x = 123.71 b) x * [(1+10.8%/12)^300 -1]/10.8%/12 = 1000000 => x = 656.88 c) x * [(1+10.8%/12)^180 -1]/10.8%/12 = 1000000 => x = 2240.70

ID: 2743821 • Letter: Y

Question

You want to be a millionaire when you retire in 40 years. How much do you have to save each month if you can earn an 10.8 percent annual return? (Do not round intermediate calculations and round your final answer to 2 decimal Places, (e.g., 32.16)) How much do you have to save each month if you wait 15 years before you begin your deposits? (Do not round intermediate calculations and round your final answer to 2 decimal Places, (e.g., 32.16)) How much do you have to save each month if you wait 25 years before you begin your deposits? (Do not round intermediate calculations and round your final answer to 2 decimal Places, (e.g., 32.16))

Explanation / Answer

let x be the savings per month

x * [(1+10.8%/12)^480 -1]/10.8%/12 = 1000000

=>
x = 123.71

x * [(1+10.8%/12)^300 -1]/10.8%/12 = 1000000

=> x = 656.88

c)
x * [(1+10.8%/12)^180 -1]/10.8%/12 = 1000000

=>
x = 2240.70

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