John is 28 years old and plans to retire at 67. He wants to have a fund at 67 th

Question

John is 28 years old and plans to retire at 67. He wants to have a fund at 67 that will let him perpetually spend $4,500 a month after retirement. Assume a continuous money flow. Answer the following. Round your answers (at the last step) to integers.
(a) Suppose that after his retirement John puts the money in a fund paying interest at an annual rate of 4.2%, compounded continuously. Then John will need $1285714 Correct: Your answer is correct. for his retirement.
(b) Suppose that John starts to invest a fixed amount each month from now until he retires, in a fund that pays interest at an annual rate of 6.2%, compounded continuously. Then he should invest $???? Incorrect: Your answer is incorrect. each month. John is 28 years old and plans to retire at 67. He wants to have a fund at 67 that will let him perpetually spend $4,500 a month after retirement. Assume a continuous money flow. Answer the following. Round your answers (at the last step) to integers.
(a) Suppose that after his retirement John puts the money in a fund paying interest at an annual rate of 4.2%, compounded continuously. Then John will need $1285714 Correct: Your answer is correct. for his retirement.
(b) Suppose that John starts to invest a fixed amount each month from now until he retires, in a fund that pays interest at an annual rate of 6.2%, compounded continuously. Then he should invest $???? Incorrect: Your answer is incorrect. each month. John is 28 years old and plans to retire at 67. He wants to have a fund at 67 that will let him perpetually spend $4,500 a month after retirement. Assume a continuous money flow. Answer the following. Round your answers (at the last step) to integers.
(a) Suppose that after his retirement John puts the money in a fund paying interest at an annual rate of 4.2%, compounded continuously. Then John will need $1285714 Correct: Your answer is correct. for his retirement.
(b) Suppose that John starts to invest a fixed amount each month from now until he retires, in a fund that pays interest at an annual rate of 6.2%, compounded continuously. Then he should invest $???? Incorrect: Your answer is incorrect. each month. Answer the following. Round your answers (at the last step) to integers.
(a) Suppose that after his retirement John puts the money in a fund paying interest at an annual rate of 4.2%, compounded continuously. Then John will need $1285714 Correct: Your answer is correct. for his retirement.
(b) Suppose that John starts to invest a fixed amount each month from now until he retires, in a fund that pays interest at an annual rate of 6.2%, compounded continuously. Then he should invest $???? Incorrect: Your answer is incorrect. each month.

Explanation / Answer

Monthly payment can be calculated using PMT function on a calculator

N = 39 x 12 = 468 months, I/Y = 6.2%/12 = 0.5167%, PV = 0, FV = 1285714

=> Compute PMT = $654.23 should be invested every month.

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