Question

Retirement Funding.  Barry has just become eligible for his​ employer-sponsored retirement plan. Barry is 35

and plans to retire at 65. Barry calculates that he can contribute ​$3,900

per year to his plan.​ Barry's employer will match this amount. If Barry can earn a return of 7​%

on his​ investment, how much will he have at​ retirement?

At​ retirement, the amount Barry will have is $_______

​(Round to the nearest​ dollar.)                      

Answer 1

The amount that Barry will have at retirement is computed as shown below:

Simply put the following figures in the financial calculator as shown below:

I = 7

N = 65 - 35

= 30

PMT = $ 3,900 x 2

= - 7,800 (Since we have invested this much of amount, hence taken as negative amount)

PV = 0

Press CPT FV, which will give FV equal to

= 736,794 Approximately

Or we can solve by an alternative method as well:

Simply multiply 7,800 by Future value annuity factor of 7% of 30 years

= 7,800 x 94.4608

= $ 736,794 Approximately

So as we can see the answers from both the methods are same.

Feel free to ask in case of any query relating to this question