Question

Shaun Barringer has started on his first job. He plans to start saving for retirement. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn an annual return of 10 percent. How much will Shaun have at the end of 45 years? (Round to the nearest dollar.)

A) $2,667,904
B) $3,594,524
C) $1,745,600
D) $5,233,442

Answer 1

Shaun Barringer, who is investing $5,000 annually at a 10% return for 45 years, will have a future value of approximately $5,819,552 in his retirement fund.

Step-by-step explanation:

The student is asking about the future value of an annuity due to regular investments in a retirement fund. Shaun Barringer plans to invest $5,000 at the end of each year for the next 45 years at an annual return of 10 percent. Using the future value of an annuity formula, we need to calculate what his retirement fund will be at the end of this period.

The future value of an annuity formula is:

FV = Pmt * (((1 + r)^n - 1) / r)

Where:

Let's calculate:

FV = $5,000 * (((1 + 0.10)^45 - 1) / 0.10)

FV = $5,000 * (117.391044 - 1) / 0.10

FV = $5,000 * (116.391044) / 0.10

FV = $5,000 * 1163.91044

FV = $5,819,552

Rounded to the nearest dollar, Shaun will have $5,819,552 at the end of 45 years.