Mary plans to make the following contributions to her retirement account: $10,000 for each of the...

Mary plans to make the following contributions to her retirement account: $10,000 for each of the next ten years, and $12,000 for each of the ten years after that. If her savings earn 5%, how much will she have at the end of the 20 years. Ignore taxes and assume that the contributions are made at the end of the year.

Solutions

Expert Solution

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=10,000*(1.05)^19+10,000*(1.05)^18+10,000*(1.05)^17+10,000*(1.05)^16+10,000*(1.05)^15+10,000*(1.05)^14+10,000*(1.05)^13+10,000*(1.05)^12+10,000*(1.05)^11+10,000*(1.05)^10+12000*(1.05)^9+12000*(1.05)^8+12000*(1.05)^7+12000*(1.05)^6+12000*(1.05)^5+12000*(1.05)^4+12000*(1.05)^3+12000*(1.05)^2+12000*(1.05)+12000

=$355815.33(Approx)

jeff jeffy answered 2 years ago

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