Question
An individual is years old. At the end of each month, he deposits $260 in a retirement account that pays 5.01% interest compounded monthly. (a)
An individual is years old. At the end of each month, he deposits $260 in a retirement account that pays 5.01% interest compounded monthly.
(a) After years, what is the value of the account?
(b) If no further deposits or withdrawals are made to the account, what is the value of the account when the individual reaches age 65?
Part 1 (a) For the first years, the individual's deposits form an (annuity due) OR (choose between for answer please :) (ordinary annuity) because the deposits are made at the (beginning) OR (end) of each period. Therefore, the formula FV equals PMT left bracket StartFraction left parenthesis 1 plus i right parenthesis Superscript n plus 1 Baseline minus 1 Over i EndFraction right bracket minus PMT FV equals PMT left bracket StartFraction left parenthesis 1 plus i right parenthesis Superscript n Baseline minus 1 Over i EndFraction right bracket should be used. After years 11, the account (continues) (does not continue) to behave as an annuity and (the same) (a different formula should be used)
. Part 2 After years, the value of the account will be $ (enter your response here). (Do not round until the final answer. Then round to the nearest cent as needed.)
Part 3 (b) When the individual reaches age 65, the value of the account will be $ (enter your response here). (Do not round until the final answer. Then round to the nearest cent as needed.)
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