Question

If Ali wants to save for retirement and plans to withdraw $2,000 every month for the next 20 years, how much should he save today if the interest rate is 5 percent per year? Give the answer rounded to the nearest hundredths.(1 point)
He must save $
.
Remaining Attempts : 3

Answer 1

Monthly rate = 0.05/12 = 0.0041666667, n = 20·12 = 240.

PV = 2000 * [1 - (1+0.0041666667)^(-240)] / 0.0041666667
≈ 2000 * 151.5254621
= 303,050.92

He must save $303,050.92.