Homework Help: Math

Posted by Sally on Wednesday, February 29, 2012 at 11:25pm.

You want to have 1.5 million in real dollars in an account when you retire in 40 yeras. the nominal return on your investment is 11 percent and the inflation rate is 3.8 percent. What real amount must you deposit each year to achieve your goal?

My answer is this correct:
real interest rate = 6.94%
FV = 1.5 million
N = 40 yrs
pmt = $7,630.72

Real amount each month is $7,630.72

Math - Nick, Monday, December 3, 2012 at 6:05pm
Real rate = 11-3.8
= 7.2%
1,500,000/(1+0.072)^40= 92960.80

To check this is correct you can do:
92960.80*(1+0.072)^40= 1,500,000

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