Question

At the end of each year, Carl and Linda Munson will deposit $2,100 into a 401k retirement account. Find the amount they will have accumulated in 10 years if funds earn 8% per year

Answer 1

$14,091

Step-by-step explanation:

The compounding formula would be used here, which is as under:

Future Value = P * [1 - (1+i)^-n] / i

Here

P is the periodic payments of $2,100

n is the number of periodic payments made which is once in a year and total of 10 in 10 years. So n = 10 number of periodic payments.

r is the annual interest rate which is 8%

By putting this value in the equation, we have:

Future Value = $2,100 * [1 - (1 + 8%)^-10] / 8%

Future Value = $14,091