Question

How much can be accumulated for retirement if $2,000 is put aside at the end of each of the next 40 years? Assume that you can earn 9% a year on your savings.

A) S675,764.89
B) S736,583.73
C) $802,876.27
D) $87,200.00

Answer 1

To calculate the amount that can be accumulated for retirement, we use the formula for the future value of an ordinary annuity. Plugging in the given values, the accumulated amount is b. $736,583.73.

Step-by-step explanation:

To calculate the amount that can be accumulated for retirement, we can use the formula for the future value of an ordinary annuity:

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

Where FV is the future value, P is the periodic payment, r is the interest rate per period, and n is the number of periods.

Plugging in the given values, we have FV = 2000 * [(1 + 0.09)^40 - 1] / 0.09 = $736,583.73

Therefore, the correct answer is B) $736,583.73.