You have just made your first $4,200 contribution to your retirement account. As

Question

You have just made your first $4,200 contribution to your retirement account. Assume you earn a return of 13 percent per year and make no additional contributions.

What will your account be worth when you retire in 27 years? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

What if you wait 10 years before contributing? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

What will your account be worth when you retire in 27 years? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

Explanation / Answer

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

1.

A=$4200(1.13)^27

=$4200*27.10927943

=$113858.97(Approx).

2.

A=$4200(1.13)^17

=$4200*7.986077845

=$33541.53(Approx).

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