In 40 years, when you retire, you dream about having $2,000,000 to travel around the world....

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In 40 years, when you retire, you dream about having $2,000,000 to travel around the world....

In 40 years, when you retire, you dream about having $2,000,000 to travel around the world. You open an investment account that promises to pay 12% per year compounded monthly. How much money must you deposit each month, starting this month and ending in 40 years, so you can finance your dream?

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Answer 1

Answer #1

Future Value of Annuity =

where r is the rate of interest i.e. 12% / 12 = 1% OR 0.01

n is the no of compounding poriods i.e 40 years * 12 = 480 periods or months

2,000,000 =

2,000,000 = Periodic Payment * 11764.7725103

Periodic Payment = 2,000,000 / 11764.7725103

Periodic Payment = 169.999 OR $ 170

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Answer 2

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In 40 years, when you retire, you dream about having $2,000,000 to travel around the world....

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