Question

In: Finance

You are 45 years old and you have $150,000 in your retirementaccount. You want to...

You are 45 years old and you have $150,000 in your retirement account. You want to have 3 million by the time you are 60. A) How much do you need earn on your investments on a monthly basis to have $3,000,000 by age 60. B) if you contribute $400 per month in the next 15 years what rate of return are you seeking for?

Solutions

Expert Solution

a.

We know that,

Future Value = Present Value * (1+ monthly rate)^number of monthly period

number of monthly period = 15*12 = 180

3000000 = 150000 * (1+ monthly rate)^180

(3000000/150000)^(1/180) - 1 = monthly rate

monthly rate = 1.68% Answer

b.

We will use financial calculator to solve this part:

N = 15*12 = 180

PMT = -400

PV = -150000

FV = 3000000

CPT I/Y = Monthly Rate = 1.6% Answer

jeff jeffy answered 2 years ago
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