Determine the periodic deposit. round to the nearest dollar. how much of the financial goal comes from deposits and how much comes from interest.
Periodic deposit
%? at the end of each months
Rate
8.25% compounded monthly
Time
40 years
Financial goal
$1,500,000
i = .0825/12 = .006875
n = 480
payment = P
1500000= P(1.006875^480 - 1)/.006875
I get P = $399.58 or $400
To find the periodic deposit, you can use the future value formula for an annuity. The formula is:
FV = P * ((1 + r)^n - 1) / r
Where:
FV = future value (financial goal)
P = periodic deposit
r = interest rate per period
n = number of periods
In this case, let's plug in the given values:
FV = $1,500,000
r = 8.25% / 12 = 0.6875% (expressed as a decimal)
n = 40 years * 12 months/year = 480 months
Now, rearrange the formula to solve for P:
P = FV * (r / ((1 + r)^n - 1))
Substituting the values:
P = $1,500,000 * (0.6875% / ((1 + 0.6875%)^480 - 1))
Calculating this equation will give you the value of the periodic deposit needed to achieve the financial goal of $1,500,000.