Question

If Sally deposits $1200 per year and the account earns interest at a rate of 4% per year, compounded annually, how much will she have in the account when she retires?

Answer 1

$88,382.67

Step-by-step explanation:

Here is the complete question:

Sally makes deposits into a retirement account every year from the age of 30 until she retires at age 65.If Sally deposits $1200 per year and the account earns interest at a rate of 4% per year, compounded annually, how much will she have in the account when she retires?

To calculate the future value of the annuity, we use this formula: amount x annuity factor

Annuity factor = {[(1+r) ^N ] - 1} / r

Amount = $1200

R = interest rate = 4%

N = number of years = 35

=( 1.04^35 - 1) / 0.04 = 73.652225

73.652225 × $1200 = $88,382.67

I hope my answer helps you