Question

Mark deposits $1500 each month in a retirement plan paying 14% compounded monthly. How much will he have in the account after 26 years?

Answer 1

Solution:
	Amount in account after 26 years is $4,666,841.01 or $4,666,841
Working Notes:
Notes:	Amount in account after 26 years we get using formula of future value of annuity as , it the future value of annuity of monthly deposit of $1500 in account which pay 14% for 26 years . And the account balance compounded monthly and deposit are also monthly so it will be computed using the normal formula of future value of annuity.
	Future value of annuity = P x ((1+i)^n - 1)/i
	P= Monthly deposits = $1500
	i=monthly interest rate = APR/12 = 14%/12
	n= no. Of payments in a year x no. Of years = 12 x 26 = 312
	Future value of annuity = value at end of 26th years =??
	Future value of annuity after 26 years = P x ((1+i)^n - 1)/i
	Future value of annuity after 26 years = 1500 x ((1+(14%/12))^312 - 1)/(14%/12)
	Future value of annuity after 26 years = 4666841.007
	Future value of annuity after 26 years = $4,666,841.01
	Future value of annuity after 26 years = $4,666,841