Question

"kirk started saving for retirement at age 50 with plans to retire at age 70. he invested an average of $300 per month in various securities, with an average annual return of 4% adjusted for inflation. assuming monthly compounding, how much has kirk saved at the start of retirement?"

Answer 1

The answer is FV = $110,032.39

Step-by-step explanation:

Monthly Savings, P = $300

Saving period = 70 - 50 = 20 years

Number of months of savings, n = 20 * 12 = 240 Months

Annual interest rate = 4% = 0.04

Monthly interest rate, r = 0.04/12 = 0.0033

The formula for finding FV is as follows. Just by putting data in it, we can find the answer.

FV = P { (1+r) ^ n-1) / r }

FV = 300 { (1+0.04/12) ^ 240-1) / 0.04/12 }

FV = $110,032.39

Answer 2

Saving period = 70 - 50 = 20 years
Number savings, n = 20*12 = 240 months
Monthly savings, P = $300
Annual interest rate = 4% = 0.04
Monthly interest rate, r = 0.04/12

If FV is the amount saved at the time of retirement,

FV = P{(1+r)^n-1)/r} = 300{(1+0.04/12)^240-1)/0.04/12} = $110,032.39