Question

After completing her residency, an obstetrician plans to invest $9,000 per year at the end of each year into a low-risk retirement account. She expects to earn 6 percent for thirty-five years. What will her retirement account be worth at the end of those thirty-five years?

Answer 1

Answer:

$1,002,913.05

Explanation:

Data provided in the question:

Amount invested at the end of each year = $9,000

Interest rate, i = 6% = 0.06

Time period, n = 35 years

Now,

Future value of the annuity = Annuity × $\left[ \frac{(1+i)^{n}-1}{i} \right]$

on substituting the respective values, we get

Future value of the annuity = $9,000 × $\left[ \frac{(1+0.06)^{35}-1}{0.06} \right]$

or

Future value of the annuity = $9,000 × 111.434783

or

Future value of the annuity = $1,002,913.05

Hence,

At the end of thirty-five years her retirement account worth will be $1,002,913.05