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Jonathan knows that he needs $2,000,000 on the day he retires
Jonathan knows that he needs $2,000,000 on the day he retires. He will retire in 33 years. If he is able to earn 11% annually on his investments, how much will Jonathan need to save per month, order to reach his goal of $2,000,000 on the day he retires?
Group of answer choices
A. $2,625
B. $1,222
C. $756
D. $508
Please use excel to show your work. NPER, rate, PMT, PV, FV
Expert Solution
Computation of Monthly Savings using PMT Function in Excel:
=pmt(rate,nper,pv,-fv)
Here,
PMT = Monthly Savings = ?
Rate = 11%/12 = 0.917%
Nper = 33 years*12 months = 396 months
PV = 0
FV = $2,000,000
Substituting the values in formula:
=pmt(0.917%,396,0,-2000000)
PMT or Monthly Savings = $507.93 or $508
So, the correct option is D "$508".
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