You would like to have $600,000 when you retire in 35 years. How
much should you invest each quarter if you can earn a rate of 2.4%
compounded quarterly?
a) How much should you deposit each quarter?
$
b) How much total money will you put into the account?
$
c) How much total interest will you earn?
| FV = | Future Value | |
| PV = | Present Value | |
| r = | rate of interest | |
| n= | no of period | |
| a) | Future Value of Annuity = | P ( (1 + r)^n - 1 ) / r |
| 600000 = | P* ((1 + 2.4%/4)^140 - 1) / (2.4%/4) | |
| 600000 = | 218.426711129748 * PV | |
| P = | 600000 / 218.426711129748 | |
| P = | 2746.92 | |
| b) | Total Money Paid = | P * n |
| 2746.92 * 140 | ||
| 384568.80 | ||
| c) | Interest = | FV - Total amount paid |
| 600000 - 384568.80 | ||
| 215431.20 |
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