Question

Amy​ Parker, a​ 22-year-old and newly hired marine​ biologist, is quick to admit that she does not plan to keep close tabs on how her​ 401(k) retirement plan will grow with time. This sort of thing does not really interest her.​ Amy's contribution, plus that of her​ employer, amounts to ​$2,400 per year starting at age 23. Amy expects this amount to increase by 33​% each year until she retires at the age of 57 ​(there will be 35 EOY​ payments). What is the compounded future value of​ Amy's 401(k) plan if it earns 55​% per​ year?

Answer 1

FV 324,258.35

Step-by-step explanation:

We have to solve for the future value of an annuity with geometric progression thus, each time it crease as a given rate In this case, 3%

`(1-(1+g)^(n)* (1+r)^(-n) )/(r - g)`

g 0.03

r 0.05

C 2,400

n 35

`(1-(1+0.03)^(35) - (1+0.05)^(35) )/(0.05 - 0.03)`

FV 324,258.35