Find the final amount in the following retirement account, in which the rate of return on...

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Find the final amount in the following retirement account, in which the rate of return on...

Find the final amount in the following retirement account, in which the rate of return on the account and the regular contribution change over time. $308 per month invested at 6%, compounded monthly, for 3 years; then $492 per month invested at 7%, compounded monthly, for 3 years.

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Answer 1

Answer #1

Part 1 :

Finding the future value of the payments after the first three years

Using financial calculator

Input:

PMT = -308

I/Y = 6/12 = 0.5

N = 3*12 =36

Solve for Fv as 12,115.52

PART 2: finding the future value of the payments after the next three years

Using financial calculator

Input:

PV = - 12,115.52

PMT = -492

N = 36

I/Y = 7/12

Solve for FV as 34,583.14

Final amount in the retirement account= $34,583.14

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Answer 2

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