finance (saving for $1,000,000)
posted by Jason .
At age 5, how much would you have to save per month to have $1 million in your account at age 65, if your investment rate was 10% per year? Assume no taxes and compounding on a monthly basis.
I use my TI-83.....
I used the solver for PMT
FINAL ANSWER IS $21.23 per month.....the negative represents a out cashflow
compounding monthly so n = (65 - 5)12 = 720 payments
rate r = .10/12 = . .008333
call investment each month = x
then sinking fund (or amount of an annuity) calculation
x = 1,000,000 * .00833 / [(1.00833)^720-1]
x = 21.27
I used .00833 instead of .1/12 to the accuracy of the calculator, suspect your answer more accurate