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Suppose you want to have \($300,000 for retirement in 30 years. Your account earns 5%
interest.
a) How much would you need to deposit in the account each month?
$\)
b) How much interest will you earn?
$
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Verified Answer :

GinnyAnswer

Final answer:

The answer explains how to calculate the monthly deposit needed to reach the retirement goal and how to determine the interest earned over the 30-year period.


Explanation:

a) How much would you need to deposit in the account each month?

  1. Calculate the monthly interest rate: 5% / 12 = 0.4167%.
  2. Use the formula for calculating monthly deposits for a future value: Deposit = FV / ((1 + Monthly Interest Rate)^Total Months - 1) / Monthly Interest Rate) where FV = \($300,000, Total Months = 30 years 12 months = 360 months.
  3. Plugging in the values: Deposit = $\)300,000 / ((1 + 0.004167)^360 - 1) / 0.004167).

b) How much interest will you earn?

  1. To calculate the interest earned, subtract the total contribution made over 30 years from the total amount accumulated.
  2. Evaluate the total interest earned by subtracting the sum of deposits made from the final account balance.
  3. Interest Earned = Total Amount - (Monthly Deposit Total Months).

Learn more about Retirement savings and interest calculation here:

https://brainly.com/question/34413682


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