Question

Ross has decided that he wants to build enough retirement wealth that

Answer 1

Answer:

The monthly contribution is $3,010.32.

The monthly contribution is such that the future value of the contribution, after 15 years (or 15*12 = 180 monthly deposits), is sufficient to support the stream of expenditures after retirement. We first compute the value of the stream of post-retirement expenditure, which gives us an idea of how must we need to save by the time of retirement.

The monthly expenditure is 4700 for 25 years (or 25 * 12 = 300 months). The effective monthly interest rate = 5% / 12 = 0.417%. So the value of the