Question

Bob, a coworker who is the same age as the Ann in the previous problem, begins to invest $2000 per year in the same mutual fund earning 12 percent. He only begins investing when Ann stops (i.e. at age 29). Bob is more disciplined, however, and invests the $2,000 every year until he retires at age 65. Calculate how much he will have in the account. Assume annual compounding.

Answer 1

$968,926.23

Step-by-step explanation:

The formula for calculating future value = A x (B / r)

B = [(1 + r)^n] - 1

R = interest rate = 12%

N = number of years 65 - 29 = 36

(1.12)^36 - 1 = 58.135574

$2000 x (58.135574 / 0.12) = $968,926.23