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You are 21 years old today. Starting one month from now, if you deposit $500 per...

You are 21 years old today. Starting one month from now, if you deposit $500 per month for 32 years into your retirement account which earns 0.7 percent per month, are you a millionaire by age of 53? Find out how much money you will have by age of 53. If that number is greater than one million, then you are a millionaire by that age.

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Expert Solution

Information provided:

Monthly deposit= $500   

Interest rate= 0.7% per month

Time= 53 years - 21 years = 32 years*12 = 384 months

The question is solved by computing the future value.

Enter the below in a financial calculator to compute the future value:

PMT= -500

I/Y= 0.7

N= 384

Press the CPT key and FV to compute the future value.

The value obtained is 958,943.43.

Therefore, I will not be a millionaire by age 53 since the amount in the retirement account will have less than one million.

jeff jeffy answered 2 years ago
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