Question

Nest egg. you begin working at age 25, and your employer deposits $300 per month into a retirement account that pays an apr of 5 % compounded monthly. what will be the size of your nest egg at age 65? (fill in the blank below and round your answer to the nearest cent.) nest egg with $300 per month = $ . suppose you are allowed to contribute $100 each month in addition to your employer's contribution. what will be the size of your nest egg at age 65? (fill in the blank below and round your answer to the nearest cent.) nest egg with $400 per month = $ .

Answer 1

c

Explanation:

Answer 2

Future value annuity is calculated using the formula:
FV=P[((1+r/100n)^nt-1)/r]
where:
P=principle
r=rate
t=time
n=number of terms:
Thus:
A monthly deposit of $300, at the rate of 5% in (65-25)=40 years will give us:
FV=300[((1+5/1200)^480-1)/(5/1200)]
FV=$457, 806.05

b] A monthly deposit of $400, at the rate of 5% in 40 years will give us:
FV=400[((1+5/1200)^480-1)/(5/1200)]
FV=$610,408.06