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Stacey would like to have​ $1 million available to her at retirement. Her investments have an average annual return of 11​%. If she makes contributions of ​$300 per​ month, will she reach her goal when she retires in 30 ​years?

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hyderali230

Answer:

She will not be able to reach her goal. She will make $841,355.92 and she is short by $158,644.08.

Explanation:

Monthly contribution = PMT = $300

Number of years = 30 years

Number of months = n = 30 x 12 = 360

Rate of return = r = 11% yearly = 11%/12 = 0.917% = 0.00917

Use following formula to calculate her total worth of investment after 30 years

FV = PMT x [ ( 1 + r )^n ) - 1 ] / r

FV = $300 x [ ( 1 + 0.00917 )^360 ) - 1 ] / 0.0917

FV = $300 x [ ( 1 + 0.00917 )^360 ) - 1 ] / 0.0917

FV = 841,355.92

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