Question

You are to make monthly deposits of $500 into a retirement account that pays 10.3 percent interest compounded monthly. if your first deposit will be made one month from now, how large will your retirement account be in 35 years?

Answer 1

To find the future value of a retirement account with $500 monthly deposits and a monthly-compounded interest rate of 10.3%, the future value formula for an annuity is used. The calculation will need the inputs of payment amount, monthly interest rate, and total number of payments over 35 years. The exact amount requires computation with these inputs.

Step-by-step explanation:

The question asks how large a retirement account will be in 35 years, given monthly deposits of $500 at an interest rate of 10.3% compounded monthly. To solve this, we use the future value formula for an annuity, as deposits are made regularly at fixed intervals. The future value of an annuity can be calculated using the formula:

FV = P * [((1 + r)^n - 1) / r]

where:

In this case, the problem can be solved with the inputs P = $500, r = 10.3%/12 per month, and n = 35*12. However, an exact numeric answer requires a calculator or financial computing tool.

Answer 2

The correct answer for this question is this one:
You are to make monthly deposits of $500 into a retirement account that pays 10.3 percent interest compounded monthly. if your first deposit will be made one month from now, your retirement account in 35 years will be roughly $10,000


Hope this helps answer your question and have a nice day ahead.