Answered: Suppose you want to have $500,000 for…

Suppose you want to have $500,000 for retirement in 35 years. Your account earns 5% interest. a) How much would you need to deposit in the account each month? S b) How much interest will you earn?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter4: Managing Your Cash And Savings

Section: Chapter Questions

Problem 7FPE: Calculating interest earned and future value of savings account. If you put 6,000 in a savings...

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Question

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Suppose you want to have $500,000 for retirement in 35 years. Your account earns 5% interest.
a) How much would you need to deposit in the account each month?
b) How much interest will you earn?
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Expert Solution

Given:

Here,

Required Amount (FV) is $500,000

Time Period (n) is 35 years

Interest Rate (r) is 5%

Compounding Period (m) is Monthly i.e 12

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