4 Upon graduating from college 35 years ago, Dr. Nick Riviera was already planni

Question

4 Upon graduating from college 35 years ago, Dr. Nick Riviera was already planning for his retirement. Since then, he has made deposits into a retirement fund on a yearly basis in the amount of $3,600. Nick has just completed his final payment and is at last ready to retire. His retirement fund has eaned 9 percent compounded Annualy. a. How much has Nick accumulated in his retirement account? b. In addition to this, 15 years ago Nick received an inheritance check for $20,000 from his beloved uncle. He decided to deposit the entire amount into his retirement fund. What is his current balance in the fund? Use a spreadsheet to illustrate how the funds are accumulated.

Explanation / Answer

(a) Accumulated Amount = Deposit Amount* (1+ Interest Rate)^time

= 3600 * (1+0.09)^35

= 3600 * (1.09)^35

=3600 * 20.414

=73490.4

(b) = 73490.4 + 20000*(1.09)^15

=73490.4 + 20000*3.642

=73490.4 + 72840

=146330.4

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