Question

Randy plans to save $10,000 per month for retirement starting today. if he earns a 10% annual return (tax free), compounded monthly, how much will it be worth in ten years? $61,445.67 $159,374.25 $756,711.63 $2,048,449.79 $9,270,806,881.78

Answer 1

Answer:

$2,048,449.79

Explanation:

Given:

Periodic payment (PMT) = $10,000

Number of payment (n) = 10 year = 10 × 12 months = 120

Rate of interest (r) = 10% annual = 0.1 / 12 month = 0.00833 per month

Future value = ?

Computation of Future value:

$Future\ value = \frac{PMT[(1+r)^n-1]}{r} \\\\Future\ value = \frac{10,000[(1+0.00833333333)^{120}-1]}{0.00833333333} \\\\Future\ value = \frac{10,000[(1.00833333333)^{120}-1]}{0.00833333333} \\\\Future\ value = \frac{10,000[2.70704042-1]}{0.008333333} \\\\Future\ value = \frac{10,000[1.70704042]}{0.00833333333} \\\\Future\ value = \frac{17,070.4042}{0.00833333} \\\\Future\ value = 2,048,449.32$

Future value = 2,048,449.32

Future value = 2,048,449.79 (Approx)