You and your spouse are considering opening a 401(k) account for retirement income. How much will...
You and your spouse are considering opening a 401(k) account for retirement income. How much will be accumulated for retirement if $5,000 is deposited at the end of each year and the account earns 6% interest compounded annually for 30 years?
please show input in the Financial calculator.
Homework Answers
Amount accumulated at retirement = Annual Deposit * [{(1 + r)n - 1} / r]
= $5,000 * [{(1 + 0.06)30 - 1} / 0.06]
= $5,000 * [4.7435 / 0.06]
= $5,000 * 79.0582
= $395,290.93
Put the following values in the financial calculator:
N = 30; I/Y = 6; PV = 0; PMT = -5000;
Press CPT, then FV, which gives us 395,290.93
So, Amount accumulated at retirement is $395,290.93
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