You want to have 300,000 when you retire in 20 years. If you can earn 6% interest compounded monthly, how much would you need to deposit now into the account to reach your retirement goal?

Solution

You want to have 300, 000 when you retire in 20 years. If you can earn 6% interest compounded monthly, how much would you need to deposit now into the account to reach your retirement goal?

Solution

Principal : 90628.84

Solution steps

Translate the problem into an equation:

300000 = P (1 + \frac{0.06}{12})^{12 \cdot 20}

Solve for

P, 300000 = P (1 + \frac{0.06}{12})^{12 \cdot 20} : P = 90628.84

Principal : 90628.84

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