Question

Matt is saving up for retirement if he deposists $1200 a year from age 25 to 55 at 3.5% compounded quarterly what his final balance? How much interest did he earn?

Answer 1

The final balance after 30 years would be $9134.70 and the interest earned would be $4,134.70.

Step-by-step explanation:

To calculate the final balance, we can use the formula for compound interest:

Final Balance = Principal * (1 + (Annual Interest Rate / Number of Compounding Periods)) ^ (Number of Compounding Periods * Number of Years)

In this case, the principal (deposited amount) is $1200, the annual interest rate is 3.5%, and the compounding period is quarterly, which means there are 4 compounding periods in a year.

Using the formula, we can find that the final balance after 30 years would be:

Final Balance = $1200 * (1 + (0.035 / 4)) ^ (4 * 30) = $1200 * (1.00875) ^ 120 = $1200 * 7.61225 = $9134.70

To calculate the interest earned, we can subtract the initial deposited amount from the final balance:

Interest = Final Balance - Deposited Amount = $9134.70 - $36,000 = $4,134.70