Question

Heather is 43. She didn't have any plan for retirement right now. She plans to retire in 17 years. She opens a fidelity Security fund and plans to deposit $500.00 every month into the account .The account pays 5.85% compounded monthly. How much interest will be earn after 17 years?

Answer 1

$54,437,972

Step-by-step explanation

We have that she wants to deposit $500 every month in the account at a compound interest rate of 5.85%.

She will do that for 17 years.

To find the amount of interest after 17 years, we will use the formula:

`I\text{ = }P(1\text{ + }r)^t\text{ - P}`

where P = principal = $500

r = monthly interest rate = 5.85%

t = number of months

To find t, we will multiply 17 years by 12 months (12 months in a year):

t = 17 * 12 = 204 months

Therefore, we have that, the interest after 17 years is:

`\begin{gathered} I\text{ = }500(1\text{ + }(5.85)/(100))^(204)-500=500(1+0.0585)^(204)\text{ - 500} \\ I=500(1.0585)^(204)\text{ - 500 = (500}\cdot108876.944)\text{ - 500} \\ I\text{ = 54438}472\text{ - 500} \\ I\text{ = \$54,437,972} \end{gathered}`

Therefore, the interest will be $54,437,972