Question

Ricardo is 30 years old. He plan to retire when he is 60. He has opened a retirement account that pays 3,5% interest compounded monthly. If he makes monthly

deposits of $400, how much will he have in the account by the time he retires?

Answer 1

9514 1404 393

Answer:

$254,165

Explanation:

Assuming payments are made to the account at the end of the month, the balance is the sum of a geometric series with first term 400 and common ratio (1+0.035/12). The sum of 360 payments will be ...

400((1+0.035/12)^360 -1)/(0.035/12) ≈ $254,165

Ricardo will have about $254,165 in his retirement account after 30 years.