Monthly saving= $250
Time= 30 years*12 = 360 months
Interest rate= 5.5%/12 = 0.4583% per month
The question is solved by first calculating the future value of savings.
The future value is calculated by entering the below in a financial calculator:
Press CPT and FV to compute the future value.
The value obtained is 228,402.97.
Therefore, the future value of the monthly saving is $228,402.97.
Next, the amount of monthly payment to be received during retirement is calculated.
The monthly payment to be received is calculated by entering the below in a financial calculator:
N= 25*12 = 300
I/Y= 4/12 = 0.3333
Press CPT and PMT to compute the amount of monthly payment to be received.
The value obtained is 1,205.60.
Therefore, the amount of payment to be received each month after retirement is $1,205.60.
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