Question

1. You are planning to make monthly deposits of $140 at the beginning of each month into a retirement account that pays 7 percent interest compounded monthly. Your retirement account will be worth how much in 28 years.

Answer 1

$20,600.90

Step-by-step explanation:

The value of $140 per month will be the equivalent of an annuity value of $140 after 28 years. The applicable formula is as below.

PV = P × 1 − (1+r)−n

r

Where PV is the future value

P is present value $140

r is the interest rate 7% or 0.07 per annum which is equivalent to 0.0058 33 per month

n=28 year or 336 months

PV= 140 x 1-( 1 + 0.005833)-336

0.005833

PV = 140 x 1-0.14167860700

0.005833

= 140 x (0.858321393/0.005833)

=140 x 147. 14921

=$20,600.90