Level 2: Annuities · Problem 27 of 69 · Pro

Monthly saving with a head start

A time value of money problem from Ratedrill. Solve it with one answer box, with fresh numbers on every attempt and the formula, calculator keystrokes and Excel version in the worked answer, and it is checked the moment you submit.

The task

You already have $8,000 saved and want $50,000 in 30 years. The account earns 3.25% APR, compounded monthly. How much must you add at the end of each month to reach the goal exactly?

What this problem teaches

Enter the starting balance as PV with the same sign as the deposits: both are money you put in. Set P/Y = C/Y = 1, so I/Y is the rate per period. Cash you pay out is negative and cash you receive is positive.

A hint if you get stuck

Grow the starting balance to the goal date first. The deposits only need to cover the gap: PMT = (FV - PV × (1 + i)^n) × i / ((1 + i)^n - 1).