Question

Ricky is 35 years old. He plans to retire when he is 63. He has opened a retirement account that pays 3.2% interest compounded monthly. If he makes monthly deposits of $400, how much will he have in the account by the time he retired?

Answer 1

Amount received = 217,043.56 (Approx)

Step-by-step explanation:

Given:

Monthly deposit = $400

Interest rate = 3.2% / 12 = 0.002667 per month

Number of year = 63 year - 35 year = 28 year

Number of period = 28 × 12 month = 336 month

Computation:

`Amount \ received = PMT[((1+r)^n-1)/(r) ]\\\\Amount \ received = 400[((1+0.002667)^(336)-1)/(0.002667) ]\\\\Amount \ received =400[((1.002667)^(336)-1)/(0.002667) ]\\\\Amount \ received =400[(2.44713794-1)/(0.002667) ]\\\\Amount \ received =400[(1.44713794)/(0.002667) ]\\\\Amount \ received =400[542.608901]\\\\Amount \ received =217,043.56\\\\`

Amount received = 217,043.56 (Approx)