You have just made your first $4,700 contribution to your retirement account. As
ID: 2621323 • Letter: Y
Question
You have just made your first $4,700 contribution to your retirement account. Assume you earn a return of 13 percent per year and make no additional contributions.
What will your account be worth when you retire in 32 years? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)
What if you wait 10 years before contributing?
You have just made your first $4,700 contribution to your retirement account. Assume you earn a return of 13 percent per year and make no additional contributions.
Explanation / Answer
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.
A=$4700*(1+13/100)^32
=$4700*49.9470901
=$234,751.32(Approx)
b.
A=$4700(1+13/100)^22
=$4700*14.71383077
=$69155.00(Approx).