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March 26, 2017

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Suppose a student wants to be a millionaire in 40 years. If she has an account that pays 8% interest compounded monthly, how much must she deposit each month in order to achieve her goal of having $1,000,000? What is the present value of this annuity?

  • math - ,

    A=P[(1+i)^n -1]/i
    =>
    P=Ai/[(1+i)^n -1]
    =1000000*(0.08/12)/((1+0.08/12)^480-1)
    =286.45023 per month.

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