Max is trying to save for retirement. He is going to deposit the same amount each month for 20 years into an account that pays 4.2% compounded interest. At the end of 20 years he would like to have $350,000, how much does he need to deposit each month (round to the nearest dollar)?
Max is trying to save for retirement. He is going to deposit the same amount each month for 20 years into an account that pays 4.2% compounded interest. At the end of 20 years he would like to have $350,000, how much does he need to deposit each month (round to the nearest dollar)?
FV=P{[1 + R]^N - 1/ R}
350,000 = P x [ 1 + 0.042/12]^(20*12) - 1 / [0.042/12]
350,000 = P x 375.134952....
P = 350,000 / 375.134952....
PMT =$933.00 monthly payment that must be made each month.