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8 November, 17:56

Tanya is 42 years old. she would like to open aretirement account so she will have half a million dollars in the account when she retires at the age 65. how much did she deposit each month into an account with an apr of 2.75% to reach her goal?

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  1. 8 November, 18:08
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    Let the total amount that Sarah deposited be $x

    using the annuity formula:

    A=P[ ((1+r) ^n-1) / r]

    A=future value

    r=rate

    n=number of years

    from the information given:

    A=$500000

    r=2.75%

    n=65-42=23 years

    p=$x

    thus plugging our values in the formula we get:

    500000=x[ ((1+0.0275) ^ (23) - 1) / (0.0275) ]

    500000=31.50x

    x=15,872.04883

    She deposited 15,873.04883 per year

    The monthly deposit will therefore be:

    15873.04883/12=$1322.67
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