To supplement your planned retirement in exactly 42 years, you estimate that you need to accumulate $220,000 by the end of 42 years from today. You plan to make equal, annual, end-of-year deposits into an account paying 8% annual interest.
a. How large must the annual deposits be to create the $220,000 fund by the end of 42 years?
b. If you can afford to deposit only $600 per year into the account, how much will you have accumulated by the end of the forty-second year?
a)To get the amount of each annual payment (PMT) ;
b)To calculate the future value, FVA;
Future value(FVA42) =$600× (304.244)