Larry wants to have $500,000 in 20 years. He found an annuity that is paying 3% with monthly compounding. The correct answer is shown at the bottom. I'm trying to see what I did wrong.
How much should be deposited each month?
Answer: $1,144.21
He decides he can only afford $1,200.00 each month. How much will he deposit in total?
Answer: $288,000.00
What will the future account balance be?
Answer: $393,962.40
How much interest, in total, will be earned?
Answer: $105,962.40
The exact amount necessary to have $500,000.00 in 20 years is $1,522.99. With a deposit of $1,200.00, the account will have a future value of $393,962.40. $288,000.00 will be deposited in total and $105,962.40 will be earned in interest.