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Sam won $150,000 in the Michigan lottery and decides to invest the money for retirement in 20 years. Find the accumulated value for Sam's retirement if he invests the amount into a bond paying 5.2% compounded daily? Round to the nearest dollar.

User Nurul Huda
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1 Answer

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To calculate the accumulated value of Sam's retirement investment, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:
A = Accumulated value
P = Principal amount (initial investment)
r = Annual interest rate (as a decimal)
n = Number of times interest is compounded per year
t = Number of years

In this case, Sam's principal amount (P) is $150,000, the annual interest rate (r) is 5.2% or 0.052 as a decimal, the interest is compounded daily, so the number of times interest is compounded per year (n) is 365, and the investment period (t) is 20 years.

Plugging these values into the formula, we get:

A = 150000(1 + 0.052/365)^(365*20)

Calculating this, the accumulated value (A) for Sam's retirement investment is approximately $423,599.

Rounding to the nearest dollar, the accumulated value for Sam's retirement would be $423,599.
User Swolf
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