To retire with $2,000,000 in 35 years, Ezequiel plans to deposit a fixed amount each month into an account with an annual interest rate of 5% compounded monthly. What is the required monthly deposit? Use the following formula: P=(FV⋅(r)/(n))/((1+(r)/(n))^nt−1)
Answer
A
4 dollars comma 258 point 3 7
B
74 point 0 8 dollars
C
1 dollars comma 760 point 4 2
D
3 dollars comma 478 point 6 4
Explanation
Use 12 monthly deposits per year for 35 years, so there are 12 × 35 = 420 deposits. Substitute into the formula: P = 2,000,000(0.05/12) ÷ ((1 + 0.05/12)^420 − 1) ≈ $1,760.42. Therefore, the required monthly deposit is $1,760.42, choice C.
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