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Suppose you want to have \( \$ 400,000 \) for retirement in 35 years. Your account earns \( 10 \% \) interest. Round answers to the nearest cent. a) How much would you need to deposit in the account each month? b) How much interest will you earn?

Ask by French Bates. in the United States
Mar 16,2025

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a) You need to deposit approximately \$105.26 each month. b) You will earn about \$355,790.80 in interest.

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To grow your retirement fund to \( \$400,000 \) in 35 years with an annual interest rate of \( 10\% \), you'll need to deposit a monthly amount into the account. Using the future value of an annuity formula, the monthly deposit needed is approximately \( \$461.63 \). So, just imagine your future self relaxing on a beach, thanks to those little monthly contributions! Now, regarding the interest earned: after 35 years, with the monthly contributions of about \( \$461.63\), you will accumulate around \( \$316,000 \) in interest! That's a neat little bonus on top of your savings, almost as delightful as a surprise party for your future self when retirement finally arrives!

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