Suppose you want to have $600,000 for retirement in 25 years

Finance Jan 30, 2021

Suppose you want to have $600,000 for retirement in 25 years. Your account earns 4% interest. How much would you need to deposit in the account each month? (Round up to the cents place.)

Expert Solution

Computation of Monthly Deposit using PMT Function in Excel:

=pmt(rate,nper,pv,-fv)

Here,

PMT = Monthly Deposit = ?

Rate = 4%/12 = 0.3333% compounded monthly

Nper = 25 years*12 months = 300 months

PV = 0

FV = $600,000

Substituting the values in formula:

=pmt(0.3333%,300,0,-600000)

PMT or Monthly Deposit = $1,167.02

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