Question

You just started your first job today. Besides your 401K, you are planning to save $3,000 a year for 40 years for your retirement when you receive tax returns. If the first deposit is made a year from now into an account with the annual interest rate of 8%, how much will you have in your account in 40 years? Round to the nearest cent. Do not include any unit (If your answer is $111.11, then type 111.11 without $ sign.)

Answer 1

The correct answer is 777.169.56.

Step-by-step explanation:

According to the scenario, the given data are as follows:

Payment per year (PMT) = $3,000

Time (N) = 40 years

Rate of interest (R)= 8%

So, the future value of the following can be calculated by using the following formula:

Future value = PMT ×
`(((1+r)^(n) -1))/(R)`

Now, put the value of the following in the formula. then,

= 3,000 ×
`(((1+8/100)^(40) -1))/(8/100)`

= 3,000 × 259.0565

= 777,169.56

Hence, the value in the account after 40 years will be 777,169.56.