You are planning to invest $ 6,000 in an account earning 5 % per year for retire

ID: 2818985 • Letter: Y

Question

You are planning to invest

$ 6,000 in an account earning 5 % per year for retirement.

a. If you put the $ 6,000 in an account at age 23, and withdraw it 31 years later, how much will you have?

b. If you wait 10 years before making the deposit so that it stays in the account for only

21 years, how much will you have at the end?

a. If you put the $ 6,000 in an account at age 23, and withdraw it 31 years later, how much will you have?

In 31 years you would have $....... (Round to the nearest cent.)

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

A=$6000*(1.05)^31

=$6000*4.538039494

=$27228.24(Approx).

A=$6000*(1.05)^21

=$6000*2.78596259

which is equal to

=$16715.78(Approx).

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