Question

Mirza is saving for his retirement by making deposits of $2,100 on each birthday into a savings account starting on his 57th birthday and ending on his 65th birthday (inclusive). Given an effective annual rate of interest of 4.4%, how much will he accumulate by his 65th birthd ay?

Answer 1

Deposit amount	2100
Annual rate of interest	4.40%
Starting birthday (nth year)	57
Ending birthday (nth year)	65
No. of years of deposit (ending year - starting year +1)	9

Future value = Deposit x FV annuity factor

Future value = Deposit x (((1+annual rate)^nth year-1)/annual rate)

Future value = Deposit x ((((1+4.4%)^9)-1)/4.4%)

Future value = 2100 x ((((1+4.4%)^9)-1)/4.4%)

Future value = 2100 x 10.7578

Future value = $ 22,591.47

Mirza will accumulate $ 22,591.47 at the end of his 65th birthday

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