Question

At the end of each year a self-employed person deposits $1,500 in a retirement account that earns 7 percent annually.a)How much will be in the account when the individual retires at the age of 65 if the contributions start when the person is 45 years old

Answer 1

FV= $61,493.24

Step-by-step explanation:

Giving the following information:

Annual deposit= $1,500

Number of periods= 65 - 45= 20 years

Annual interest rate= 7%

To calculate the future value, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {1,500*[(1.07^20) - 1]} / 0.07

FV= $61,493.24