Luis has $150,000 in his retirement account at his present company. Because he i
ID: 3018588 • Letter: L
Question
Luis has $150,000 in his retirement account at his present company. Because he is assuming a position with another company, Luis is planning to "roll over" his assets to a new account. Luis also plans to put $2000/quarter into the new account until his retirement 30 years from now. If the new account earns interest at the rate of 2.5%/year compounded quarterly, how much will Luis have in his account at the time of his retirement? Hint: Use the compound interest formula and the annuity formula. (Round your answer to the nearest cent.)
Explanation / Answer
amount = 150000 + 2000[(1 + 2.5/400)119 + (1 + 2.5/400)118 + (1 + 2.5/400)117 + ..........(1 + 2.5/400) + (1 + 2.5/400)0 ]
= 150000 + 2000[(161/160)119 + (161/160)118 + (161/160)117 + ........(161/160) + (161/160)0]
= 150000 + 2000 x 1 x ((161/160)120 - 1)/(161/160 -1) = 505860.68
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