Question

If I deposit $6000 per year into my retirement account every year, how much will I have in 20 years? Assume interest rates of 12% compounded annually.

Select one:

a. $482,314.65

b. $484,192.41

c. $57,877.76

d. $432,314.65

Answer 1

If I deposit $6000 per year into my retirement account every year, how much will I have in 20 years? Assume interest rates of 12% compounded annually.

solution:

This is a problem of annuity as in this amount is computed in the following way:

Deposit Regular = $6000 per year

Time = 20 years

Interest year= 12%

PM= Deposit ((1+(R /K )K*M-1)/R/K))

=PM is the total amount after M years(Here 20 years)

= D = Regular Deposit (Here $ 6000)

=r = is the annual interest rate

= K = number of compounding (Here 1 year is the compounding)

Now Putting Values

= $6000((1+01.12)/1)-1)/0.12/1

432314.6547

So option d is the correct answer .