Question

Suppose Miss Roxanne Davenport is 25 years old right now and puts away $1,800 per quarter in an account that returns 6% interest. a.) How much will be in the account when she turns 65? b.)What is her total contribution to the account?

Answer 1

a. Total amount after 65 years = $1179415.39

b. The total contribution to the account = $288000

Explanation:

Given annuity amount = $1800

Total number of years for contribution = 65 – 25 = 40 years

Interest rate = 6%

a. Total amount after 65 years = Annuity[((1+r)^n -1) / r]

Total amount after 65 years = 1800×((1+.06/4)^(4 × 40) - 1)/(.06/4)

Total amount after 65 years = $1179415.39

b. The total contribution to the account =1800 × 4 Quarter × 40 Years

The total contribution to the account = $288000