Question

Today is your 25th birthday, and you want to save $2.3 Million by your birthday at age 70. If you expect to earn 7% APR compounded monthly in your retirement account, what constant payment at the end of each month must you deposit into the account through your 70th birthday in order to reach your retirement savings goal on your 70th birthday? (Answer to the nearest penny.)

Answer 1

Solution.>

I have solved it in Excel. The formula used are written in the column along with the values. If you still have any doubt, kindly ask in the comment section.

The monthly savings of $606.44 has to be done in order to save $2.3m upto 70th birthday.

The formula used is: =PMT(Monthly Rate,No of periods,Present Value, -Future Value)

Monthly Rate = 7%/12

No of Periods = (70-25) *12

PV = 0

FV = -2300000

Note: Give it a thumbs up if it helps! Thanks in advance!