Suppose that Michael wants to have $250,000 saved by the time
he has reached age 30....
Suppose that Michael wants to have $250,000 saved by the time
he has reached age 30. He is currently 21 and has no money in
invested. Michael thinks that he can earn an annual return of 7% on
his investments compounded monthly.
How much does he need to invest each month to reach his
goal?
If his investments were compounded annually and not monthly,
how much short was he on reaching his goal?
Solutions
Expert Solution
1)
Hence, Investment in each month is
$1,668.24
2)
Amount saved will be $239,785.92
Hence, Amount will be short by $10,214.08
($250,000-$239,785.92)
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