Marna plans to retire in 27 years and expects to need 750000

Marna plans to retire in 27 years and expects to need $750,000. How much must she invest every quarter into a savings account to accomplish her goal? The annual interest rate is 6.4% and interest is compounded quarterly.

Solution

Amount expected = $ 750,000

Time = 27 years

Rate = 6.4%

Amount = Principal{ 1+rate/100)^time

750,000 = P { 1+6.4/100}^27

P = 750,000/ 5.338 = $ 140502.06

This is total investemendt she needs to make $ 140502.06

Every quarte ( no. of quarters 27 x 4 = 108) = $ 140502.06/108 = $1300.95

She invest $1300.95  every quarter into a savings account to accomplish her goal