Question

You are planning to make monthly deposits of $370 into a retirement account that pays 9 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 35 years?

Answer 1

Answer:

Future value = $1,088,460.26

Explanation:

Given:

Periodic payment (PMT) = $370

Internet rate (r) = 9% / 12 = 0.75% per month  = 0.75 /100 =0.0075

Number of period (n) = 35 years x 12 months = 420

Future value = ?

Computation of future value:

$Future \ value = Pmt[\frac{(1+r)^n-1}{r} ]\\\\Future \ value = 370[\frac{(1+0.0075)^{420}-1}{0.0075} ]\\\\Future \ value = 370[\frac{(1.0075)^{420}-1}{0.0075} ]\\\\Future \ value = 370[\frac{23.0633836-1}{0.0075} ]\\\\Future \ value = 370[\frac{22.0633836}{0.0075} ]\\\\Future \ value = 370[2,941.78448]\\\\Future \ value = 1,088,460.26$

Future value = $1,088,460.26