Question

Your 401(k) retirement account is currently worth $55,000. Assuming no more contributions, what will your account be worth in 20 years at an annual rate of 10.5%?

N= I/Y= PV= PMT= FV= P/Y=

Answer 1

Your account is going to be worst $405,142.92

Explanation:

This is a compound interest problem.

The compound interest formula is given by:

`A = P(1 + (r)/(n))^(nt)`

Where A is the amount of money, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per unit t and t is the time the money is invested or borrowed for.

So, for this problem:

We want to find A

`P = 55,000`

`n = 1`

`r = 0.105`

`t = 20`

`A = P(1 + (r)/(n))^(nt)`

`A = 55000(1 + (0.105)/(1))^(20)`

`A = 405,142.92`

Your account is going to be worst $405,142.92