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Max is trying to save for retirement. He is going to deposit the same amount each month for 20 years into an account that pays 4.2% compounded interest. At the end of 20 years he would like to have at least $200,000, how much does he need to deposit each month (round to the nearest dollar)?

Respuesta :

Aliwohaish12
200000=X[((1+(0.042/12)^(12*20))-1)/(0.042/12)]
Solve for x
X=533.1414708
That's what I got in my calculator

Answer:

Max needs to deposit $533.14 each month.

Step-by-step explanation:

The formula use here is :

[tex]FV=P(([1+R]^N-1)/R)[/tex]

FV = 200000

P = ?

R = [tex]4.2/12/100=0.0035[/tex]

N = [tex]20\times12=240[/tex]

Putting these values in formula:

[tex]200000=P(([1+0.0035]^{240}-1)/0.0035)[/tex]

=> [tex]200000=P(([1.0035]^{240}-1)/0.0035)[/tex]

=> [tex]200000=375.13P[/tex]

=> P = $533.14  

Hence, Max needs to deposit $533.14 each month.

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