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You are planning to make monthly deposits of $170 into a retirement account that pays 12...

You are planning to make monthly deposits of $170 into a retirement account that pays 12 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 14 years?

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Answer #1

[(1+г) — 1 FV of Annuity %3D Р т Р- Рeriodic Pаутent г3 rate per period п 3 питber o ff periods

For this question, n = 14 year * 12 = 168 months, r = 12%/12 = 1% (per month)

FV = 170 * [\frac{(1+0.01)^{168} -1}{0.01}]

FV = 170 * 432.097

FV = $73,456.49

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Answer #2

SOLUTION :


Monthly compounding.


Monthly deposit, A = 170 ($)


Monthly interest rate, r = 12/12 =1% = 0.01 in decimals

=> 1 = r = 1.01


Periods, n = 14 * 12 = 168 months


So, 


FV after 14 years (168 months)


= A((1 + r)^n - 1) / r

= 170 * (1.01^168 - 1) / 0.01

= 73456.49 ($) (ANSWER).

answered by: Tulsiram Garg
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