Question

You are planning to invest $5000 in an account earning 9% per year for retirement. a. If you put the $5000 in an account at age 23, and withdraw it 42 years later, how much will you have? b. If you wait 10 years before making the deposit, so that it stays in the account for only 32 years, how much will you have at the end?

Answer 1

Answer:

A).Amount = $218250

B). Amount = $88700

Step-by-step explanation:

A) .$5000 in an account at age 23, and withdraw it 42 years

Number of years t= 42 years

Principal P = $5000

Rate r= 9%

Number of times compounded n= 42

A= p(1+r/n)^(nt)

A= 5000(1+0.09/42)^(42*42)

A= 5000(1+0.002143)^(1764)

A= 5000(1.002143)^1764

A= 5000(43.65)

A= 218250

Amount = $218250

B).waits 10 years before making the deposit, so that it stays in the account for only 32 years

Number of years t= 32 years

Principal P = $5000

Rate r= 9%

Number of times compounded n= 32

A= p(1+r/n)^(nt)

A= 5000(1+0.09/32)^(32*32)

A= A= 5000(1+0.0028125)^(1024)

A= 5000(1.0028125)^1024

A= 5000(17.74)

A= 88700

Amount = $88700