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suppose you want to have 700,000 for retirement in 35 years. your account earns 9% interest. a...

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Finance

suppose you want to have 700,000 for retirement in 35 years. youraccount earns 9% interest.

a how much would you need to deposit in the account eachmonth?

b how much interest will you earn

Answer & Explanation Solved by verified expert
4.2 Ratings (847 Votes)

a.            237.95
Working:
Future value of annuity of 1 = (((1+i)^n)-1)/i Where,
= (((1+0.0075)^420)-1)/0.0075 i 9%/12 = 0.0075
= 2941.784474 n 35*12 = 420
Monthly deposit = Future value of monthly deposit / Future value of annuity of 1
=                7,00,000 / 2941.784
=                   237.95
b. 6,00,060.66
Interest earned = Future value of deposits - Amount deposited
=                7,00,000 -        237.95 * 420
=                7,00,000 - 99,939.34
=          6,00,060.66

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Transcribed Image Text

suppose you want to have 700,000 for retirement in 35 years. youraccount earns 9% interest.a how much would you need to deposit in the account eachmonth?b how much interest will you earn

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