You are currently 37 years old, and you plan to retire in 30 years. You’ve estim

Question

You are currently 37 years old, and you plan to retire in 30 years. You’ve estimated that you need to accumulate an additional $1 million by the time you retire in order to fund your retirement income shortfall.

a). If you invest your funds to earn 6 percent per year, how much do you need to save each month? (Round answer to 2 decimal places, e.g. 52.75.)

b). If you invest your funds and they will earn 8 percent per year, how much do you need to save each month? (Round answer to 2 decimal places, e.g. 52.75.)

Explanation / Answer

a)

b)

Saving per month (P) FVA÷([(1+r)^n-1]÷r) Here, 1 Interest rate per annum 6.00% 2 Number of years                                                                      30 3 Number of payments per per annum                                                                      12 1÷3 Interest rate per period ( r) 0.50% 2×3 Number of periods (n) 360 Future value of annuity (FVA) $                                                   1,000,000 Saving per month (P) $                                                         995.51 1000000/(((1+0.50%)^360-1)/0.50%)

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.