You want to have 800,000 when you retire in 10 years. If you can earn 7% interest compounded monthly, how much would you need to deposit now into the account to reach your retirement goal?

Solution

You want to have 800, 000 when you retire in 10 years. If you can earn 7% interest compounded monthly, how much would you need to deposit now into the account to reach your retirement goal?

Solution

Principal : 398077.01

Solution steps

Translate the problem into an equation:

800000 = P (1 + \frac{0.07}{12})^{12 \cdot 10}

Solve for

P, 800000 = P (1 + \frac{0.07}{12})^{12 \cdot 10} : P = 398077.01

Principal : 398077.01

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