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1) How much should you deposit at the end of each month into an investment account that pays 9% compounded monthly to have $3 million when you retire in 40 years?


2) How much of the $3 million comes from interest?

Respuesta :

codedmog101

Answer:(1). $627.77

(2). $2,698,670.4

Step-by-step explanation:

Using the formula below;

P= A(r/n) / (1+r/n)^nt - 1 --------(1).

A= annuity= 3,000,000 United States of America dollar

P=?, t= 40 years, n= 12, , r= 9%= 9/100= 0.09

Therefore, substitution into equation (1) above;

P= 3,000,000 (0.09/12)/ (1+0.09/12)^12×40 -1

= 22,500/(1.0075)^479

=22,500/ 35.84

= 627.77.

My monthly payment will be $627.77.

Principle payment will now be;

Principle= n×t× monthly payment

= 12× 40× 627.77

= $ 301,329.6.

(b). Interest= Annuity - principle

$(3,000,000 - 301,329.6

= $2,698,670.4

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