You plan on retiring in exactly 38 years and you would like to have a retirement fund balance of exactly $1,000,000 at that time. You are convinced

You plan on retiring in exactly 38 years and you would like to have a retirement fund balance of exactly $1,000,000 at that time. You are convinced that you can earn an APR (based on monthly compounding) of 6.54%. If you are making end-of-the-month payments into the account, how much does each one of the payments need to be in order to reach your target? To nearest $0.01

Expert Solution

Each monthly payment is calculated using the PMT function:

= PMT(rate,nper,pv,-fv)

= PMT(6.54%/12,38*12,,-1000000)

= $498.96

Where, rate is periodic rate ,n per is number of periods, fv is future value.

Each one of the payments need to be in order to reach your target will be $498.96.

Junaid answered 1 year ago

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