Answer:
Monica contributes "$628.55" every month to reach her goal.
Explanation:
The given value is:
Monthly income of Monica for 20 years = $5000
As we know,
Value of withdrawls at retirement,
= [tex]PMT\times \frac{(1-(\frac{1}{1+r^n}))}{r}[/tex]
On putting the values in the above formula, we get
= [tex]5000\times \frac{(1-(\frac{1}{1.00667^{240}}))}{0.00667}[/tex]
= $597,771.46
Therefore,
Fv (Future value) = $597,771.46
Now,
[tex]PMT=\frac{Fv}{((1+r)^n-1)}/r[/tex]
On putting the values in the above formula, we get
[tex]PMT=\frac{597771.46}{(((1.00667^{300})-1)/0.00667)}[/tex]
[tex]PMT =[/tex] $628.55
So that the monthly savings will be "$628.55".
