Answer to Question #119950 in Financial Math for Syndiya Mala Shankar

Question #119950

III. John is currently 25 years old. He has $10,000 saved up and wishes to deposit this into a savings account which pays him J12 = 6% p.a. He also wishes to deposit $X every month into that account so that when he retires at 55, he can withdraw $2000 every month end to support his retirement. He expects to live up till 70 years. How much should he deposit every month into his account?

Expert's answer

The future value is:

"FV = 15\u00d712\u00d72,000 - 10,000 = 350,000."

The monthly payment is:

"Pmt = \\frac{350,000\\times0.06\/12}{(1 + 0.06\/12)^{30\\times12} - 1} = 348.43."

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Assignment Expert

07.06.20, 23:31

As 70-55=15, that is why 15 is used in the formula of the future value. The multiplier 12 in the formula of the future value is applied because $2000 is withdrawn every month and it is known the year consists of 12 months.

Matelita

07.06.20, 05:19

How did you get the 15 and 12 from the Future value please explain

Answer to Question #119950 in Financial Math for Syndiya Mala Shankar

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