You want to retire exactly 35 years from today with $2,100,000 in your retirement account. If you think you can earn an interest rate of 10.67 percent compounded monthly, how much must you deposit each month to fund your retirement

$464.98

Explanation:

For this question, we are going to use the annuity formula

Future value of an annuity:

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

where

A = Annuity payment = unknown

r = rate per period

=10.67%/12

= 0.1067/12

= 0.00889

n = number of period:

= 35 × 12

= 420

Future value(FV) = $2,100,000

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

2100000 = A[(1+0.00889)^420 - 1)/0.00889

2100000 = A[1.00889)^420 - 1/0.00889

2100000 = A(41.15 - 1)/0.00889

2100000 = A(40.15)/0.00889

2,100,000 = A(4516.31)

A = 2,100,000/4516.31

A = $464.98

I must deposit $464.98 each month to fund the retirement

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