You have a goal of saving $2,000,000 for retirement at age 65

Finance Feb 10, 2021

You have a goal of saving $2,000,000 for retirement at age 65. If you are 23 years old and can invest at a rate of 7.5% per year, how much do you need to save monthly to accomplish your goal? You are starting with nothing saved for retirement.

Expert Solution

Computation of Monthly Savings using PMT Function in Excel:

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

Here,

PMT = Monthly Savings = ?

Rate = 7.5%/12 = 0.00625

Nper = (65-23)*12 months = 504 months

PV = 0

FV = $2,000,000

Substituting the values in formula:

=pmt(0.00625,504,0,-2000000)

PMT or Monthly Savings = $565.40

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote