Retire a Millionaire: Monthly Payment Calculation

Monthly Payment Calculation

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Question

Tom wants to retire a millionaire. If he is 30 years old today, what monthly payment would he need to make beginning one month from today and continuing until he retires on his 65th birthday, if the money will earn 8% per year, compounded monthly?

Answers

Explanations

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A. B. C. D. E.

Explanation

The total number of deposits will be 420 (35 years x 12 months/year). On the BAII Plus, press 420 N, 8 divide 12 = I/Y, 0 PV, 1000000 FV, CPT PMT. On the

HP12C, press 420 n, 8 ENTER 12 divide i, 0 PV, 1000000 FV, PMT. Note that the answer will be displayed as a negative number. Make sure the BAII Plus has the P/Y value set to 1.

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