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Lisa is putting together a retirement plan and is scheduled to retire in 32 years. She is planning to open a retirement account and invest an equal amount each month into the retirement account. If she expects to earn 9% per year in the account and is planning to have $2,000,000 in the account at retirement, what is the amount of the monthly investment?

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ijaz4308

Answer:

$902.32

Explanation:

The amount that the Lisa should put in her account every month in order to get the sum of $2,000,000 in the account of retirement at the end of 32 years shall be determined through the future value of annuity formula as follows:

Future value of annuity=R[((1+i)^n-1)/i]

In the given question

Future value of annuity=$2,000,000

R= amount that the lisa shall put in her account monthly

i=interest rate compounded monthly=9/12=0.75%

n=number of payments to be made=32*12=384

2,000,000=R[((1+0.75%)^384-1)/0.75%]

R=$902.32

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