Question #147770

A twenty-year-old decides to save Rs.1,000 per month into a retirement account that will

mature when she will turn 65. How much will she accumulate assuming that the she gets

a return @12% per annum compounded monthly? How much will a 40-year-old get if he

makes a similar investment? How much more does he need to invest to get the same

amount?

mature when she will turn 65. How much will she accumulate assuming that the she gets

a return @12% per annum compounded monthly? How much will a 40-year-old get if he

makes a similar investment? How much more does he need to invest to get the same

amount?

Expert's answer

in 65 years:

1000*\frac{(1+0.12/12)*((1+0.12/12)^{(65-12)*12}-1}{1.01-1}=56,485,795.36

40-year-old:

1000*\frac{(1+0.12/12)*((1+0.12/12)^{(65-40)*12}-1}{1.01-1}=1,897,635.09Â - will get

needs to invest per month:

56,485,795.36-1,897,635.09=54,588,160.27

54,588,160.27/\frac{(1+0.12/12)*((1+0.12/12)^{(65-40)*12}-1}{1.01-1}=29,054.08

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