HELP!! URGENT!!

Question

A 25-year-old decides that her goal is to retire at age 50 with at least

$1,750,000 in savings. The company investment annuity offers 7.1% annual returns, compounded monthly. What amount will she need to invest each month?

Answer 1

This is a time value of money problem... The formula to find the monthly payment needed to achieve a future value is:

PMT = FV [(r/n) ÷ ((1 + (r/n))^nt - 1)], where

FV = $1,750,000

r = 7.1% = 0.071

n = 12

t = 25

Substituting the values into the formula--be careful of your use of parentheses--results in a payment of $2,126.33...