Question

Ricky is 35 years old. He plans to retire when he is 63. He has opened a retirement account that pays 3.2% interest compounded monthly. If he makes monthly deposits of $400, how much will he have in the account by the time he retired?

Answer 1

Answer:

Amount received = 217,043.56 (Approx)

Explanation:

Given:

Monthly deposit = $400

Interest rate = 3.2% / 12 = 0.002667 per month

Number of year = 63 year - 35 year = 28 year

Number of period = 28 × 12 month = 336 month

Computation:

$Amount \ received = PMT[\frac{(1+r)^n-1}{r} ]\\\\Amount \ received = 400[\frac{(1+0.002667)^{336}-1}{0.002667} ]\\\\Amount \ received =400[\frac{(1.002667)^{336}-1}{0.002667} ]\\\\Amount \ received =400[\frac{2.44713794-1}{0.002667} ]\\\\Amount \ received =400[\frac{1.44713794}{0.002667} ]\\\\Amount \ received =400[542.608901]\\\\Amount \ received =217,043.56$

Amount received = 217,043.56 (Approx)