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$____________4. Your uncle is offered the following retirement plan by the Nike Shoe Company: pay $150...

$____________4. Your uncle is offered the following retirement plan by the Nike Shoe Company: pay $150 per month into the plan for the next 22 years and they will guarantee him a return of 10% per year, compounded monthly, for the entire period. How much will Al have in his account at the end of 22 years?

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Answer #1

Periodic monthly annuity payment in account = $150 per month

Calculating the Future Value of Annuities using the Future value of Ordinary Annuity Formula:

Where, C= Periodic Payments = $150

r = Periodic Interest rate = 10%/12 = 0.8333%

n= no of periods = 22 years*12 = 264

Future Value = $142,976.07

So, the amount in account after 22 years is $142,976.07

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