Question

You are planning to make annual deposits of $5,850 into a retirement account that pays 8 percent interest compounded monthly. how large will your account balance be in 25 years?

Answer 1

The value of the retirement account will be the future value which is calculated using FV function of Microsoft excel as in =FV(rate,nper,pmt) where

RATE = Annual interest rate = 8% = 8/100 =0.08

NPER = number of periods = number of years = 25

PMT= Annual deposit = 5850

Retirement account value =FV(0.08,25,5850) = 427,669.75

The balance in the retirement account in 25 years = $427,669.75