Question

If you want to retire on your 55th birthday as a millionaire, how much will you need to invest monthly beginning on your 25th birthday if the annual rate is 4%?

Answer 1

Future Value of an Annuity Due
= C*[(1+i)^n-1]/i] * (1+i)
Where,
c= Cash Flow per period
i = interest rate per period =4%/12 =0.33333%
n=number of period =(55-25)*12= 360
$1000000= C[ (1+0.00333333)^360 -1 /0.00333333] * (1 +0.00333333)
1000000= C[ (1.00333333)^360 -1 /0.00333333] * 1.00333333
1000000= C[ (3.3135 -1 /0.00333333] * 1.00333333
C = $1436.03
Monthly investment = $1436.03