Question

Nicole wants to have 2 million dollars in her account when she
retires in 40 years. Nicole's retirement account is currently
earning 8.5% interest compounded monthly. How much does she need to
deposit each month to reach her retirement goal?

Answer #1

assuming monthly installments done at the END of every month.

future value of money = FV = FV = PV(1+r/k)nk + PMT ((1+r/k)nk −1) / (r/k)

where PV = present value = 0 in this case as no initial investment done

PMT= present monthly installments = unknown

r = interest rate =8.5% per ANNUM compounded monthly

k = payment frequency = monthly = 12

n = number of years = 40

FV = FUTURE VALUE = 2,000,000 dollars

putting values,

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