Question

Jose deposits $800 annually into a Teacher Credit Union for retirement that earns 3.25% compounded annually. Ignore the tax. Due to the change in employment, these deposits stop after 15 years, but the account continues to earn interest until he retires 20 more years from the end of the 15^th year. How much is in the account when he retires?

Answer 1

Amount at the end of 15 years = Annual Deposit * FVAF(3.25%, 15 Years)

Amount at the end of 15 years = $800 * 18.5267

Amount at the end of 15 years = $14,821.32

Amount after 20 more years = Amount at the end of 15 years * (1 + R )ⁿ

Amount after 20 more years = $14,821.32 * (1+0.0325)²⁰

Amount after 20 more years = $14,821.32 * 1.8958

Amount after 20 more years = $28,098.82

Amount at the time of Retirement = $28,098.82

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