Question
Burt Sbeez is saving up for his retirement. Today is his 40th birthday. Burt first started saving when he was just 25 years old. On
Burt Sbeez is saving up for his retirement. Today is his 40th birthday. Burt first started saving when he was just 25 years old. On his 25th birthday, Burt made the first contribution to his retirement account when he deposited $3,000. Each year on his birthday, Burt has contributed another $3,000 to the account. The 16th (and last) of these contribu tions is made today. The account has paid interest at the rate of 4.2% APR, compounded monthly. Burt wants to close the account today and move the money to a stock fund which is expected to earn a return of 9%/ year. Burts plan is to continue making contributions to this account each year on his birthday. His next contribution will be one year from now (at age 41) and his final planned contribution will be on his 65th birthday. If Burt wants to accumulate $4,500,000 in his account by the instant that he reaches age 65, how much must he contribute each year until age 65 (25 contributions in all) to achieve his goal?
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