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Payments with periodic rates. Denise has her heart set on being a millionaire. What payment does
Denise need to make at the end of each month over the coming 40 years at APR to reach her
retirement goal of million?
What monthly payment does Denise need to make to reach her retirement goal?
(Round to the nearest cenir)

Ask by Stewart Riley. in the United States
Jan 24,2025

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Tutor-Verified Answer

Answer

Denise needs to make a monthly payment of $257.48 to reach her retirement goal of $1.2 million in 40 years at a 9% APR.

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Mind Expander

To calculate the monthly payment Denise needs to make in order to reach her retirement goal of $1.2 million in 40 years at a 9% annual interest rate, we can use the future value of an annuity formula. The formula is:
Where:
  • is the future value ($1,200,000)
  • is the monthly payment
  • is the monthly interest rate (annual rate / 12)
  • is the total number of payments (number of years × 12)
Using and , we rearrange the formula to solve for :
Substituting the values:
Calculating this yields:
  1. Calculate which is approximately 10.932.
  2. Then .
Therefore, Denise needs to make a monthly payment of approximately to achieve her retirement goal of million in 40 years.

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