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How much would you have to deposit in a savings account each month at 5% interest/yr....

How much would you have to deposit in a savings account each month at 5% interest/yr. compounded monthly, to have $1,000,000.00 in the account at the end of 40 years?

Note: your deposits will be made at the end of each month.

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Homework Answers

Answer #1

Future Value =

where r is the rate of Return for compounding period = 5% / 12 = 0.41666666666%

n is the no of compounding period 40 years * 12 = 480 months

1,000,000 =

1,000,000 = Periodic Payment * 1526.02015323

Periodic Payment = 1,000,000 / 1526.02015323

Periodic Payment = $ 655.30  

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