Answer to Question #135786 in Finance for abdullah

Question #135786

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?


1
Expert's answer
2020-10-07T07:08:49-0400

a)To get the amount of each annual payment (PMT) ;



PMT=


PMT =$723.10


b)To calculate the future value, FVA;



Future value(FVA42) =$600× (304.244)


FVA=$182,546.40

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