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

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

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

b how much interest will you earn

Expert Solution

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

jeff jeffy answered 9 months ago

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