Answer:
Explanation:
So, the total interest earned over 35 years at 9% interest would be approximately $150,652.20.
What is interest rate?
An interest rate is the amount of money that a lender charges a borrower for the use of borrowed money. It is typically expressed as a percentage of the amount borrowed and can be fixed or variable. Interest rates are set by central banks or other financial institutions and can vary based on a range of factors such as inflation, economic growth, and the creditworthiness of the borrower. In general, higher interest rates make borrowing more expensive, while lower interest rates make borrowing cheaper.
To calculate the monthly deposit required to achieve $300,000 in 35 years at 9% interest, we can use the following formula:
where PMT is the monthly payment, FV is the future value (which is $300,000), r is the monthly interest rate (which is 9% / 12 = 0.0075), and n is the number of payments (which is 35 years x 12 months per year = 420).
a) Plugging in these values into the formula, we get:
So, you would need to deposit approximately $355.89 per month to achieve a retirement fund of $300,000 in 35 years at 9% interest.
b) To calculate the total interest earned, we can subtract the total amount deposited ($355.89 x 420 = $149,347.80) from the future value ($300,000):
So, the total interest earned over 35 years at 9% interest would be approximately $150,652.20.