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2 September, 05:13

You are to make monthly deposits of $675 into a retirement account that pays an APR of 10.3 percent compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 31 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

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  1. 2 September, 06:51
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    FV = $1,811,070.34

    Explanation:

    Giving the following information:

    You are to make monthly deposits of $675 into a retirement account that pays an APR of 10.3 percent compounded monthly.

    First, we need to calculate the monthly interest rate:

    Monthly interest rate = 0.103/12 = 0.008583

    Number of months = 31*12 = 372

    Now, using the following formula, we can calculate the ending value:

    FV = {A*[ (1+i) ^n-1]}/i

    A = monthly deposit = 675

    FV = {675*[ (1.008583^372) - 1]} / 0.008583

    FV = $1,811,070. 34
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