Question

Consider that you are 45 years old and have just changed to a new job. You have $150,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $7,200 each year into your new employer’s plan. If the rolled over money and the new contributions both earn an 8 percent return, how much should you expect to have when you retire in 20 years?

Answer 1

Value of the retirement accoutn after 20 years: $ 1,028,629.71‬

Step-by-step explanation:

future value of the 150,000 amount rolled over:

`Principal \: (1+ r)^(time) = Amount`

Principal 150,000.00

time 20.00

rate 0.08000

`150000 \: (1+ 0.08)^(20) = Amount`

Amount 699,143.57

future value of a 20 years anuity of 20 year at 8% interest rate:

`C * ((1+r)^(time)-1 )/(rate) = FV\\`

C 7,200.00

time 20

rate 0.08

`7200 * ((1+0.08)^(20) -1 )/(0.08) = FV\\`

FV $329,486.1429

Total amount after 20 years:

699,143.57 + 329,486.14 = 1,028,629.71‬