Question

An engineer on the is planning to retire in 10 years. She has accumulated savings of $450,000 that are in an account paying 7% interest compounded quarterly. If she makes no more deposits, how much would her retirement savings be when she retires?

(a) $765,223

(b) $885,215

(c) $900,719

(d) $999,756

Answer 1

The correct option is (c) $900,719

Explanation below,

Given,

An engineer planning to retire in 10 years.

She has accumulated saving of $450,000.

Rate of interest = 7% Compounded Quarterly

Here, We have to find That how much would her retirement saving be when she retires. So, to find it we can Use the following:-

FV = A (1 + r)ⁿ

Where,

FV = Future value = To find

A = Accumulated saving = $450,000

r = Rate of interest = 7% = 0.07 / 4 = 0.0175 Quarterly

n = Time 10 years * 4 = 40

Substuting the respective Given data in the formula:-

FV = A (1 +r)ⁿ

FV = $450,000 (1 + 0.0175)⁴⁰

FV = $450,000 (1.0175)⁴⁰

FV = $450,000 * (2.0015973432)

FV = $900,718.8444 OR $900,719

So the correct option is ''C'' $900,719