Question

by name and label all inputs. 1: Saving for Retirement Devon is young and has just graduated college with her associate's degree. She plans to start saving money for retirement as soon as she starts her new job. By taking 10% of her monthly gross income, Devon is able to contribute (a) $ $587 each month to a retirement plan. The account is expected to earn interest with an APR of 5.25% compounded monthly. Round answers to two decimal places. a. How much money will be in Devon's retirement account if she continues to make the same monthly investment for 40 years? (3 pt) I b. Overall, Devon contributed how much of her own money into the retirement account? (4 pt)

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Answer 1

The amount of money in Devon's retirement account if she saves $587 each month for 40 years is $956,488.14.

The total amount of her money contributed is $956,488.14.

What is the value of th retirement account?

The formula that can be used to determine the future value of the retirement account is:

Future value = monthly contribution x annuity factor

Annuity factor = {[(1+r)^n] - 1} / r

Where:

• r = interest rate  = 5.25% / 12 = 0.4375%
• n = number of years = 40 x 12 = 480

{[(1.004375^480) - 1] / 0.004375} x  $587 = $956,488.14

Total contributions =  $587 x 12 x 40 = $281,760

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