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A small business owner contributes $3000 at the end of each quarter to a retirement account...

A small business owner contributes $3000 at the end of each quarter to a retirement account that earns 8% compounded quarterly. Suppose when the account reaches $150,000, the business owner increases the contributions to $4000 at the end of each quarter. What will the total value of the account be after 15 more years?

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Answer #1

Here, we need to calculate the FV at the end of 15 years taking $150,000 as the PV.

Compounding frequency is quarterly.

No of periods = 15*4 = 60

Rate per period = 8%/4 = 2%

PMT per period = 4000

Using FV function in excel:

Therefore, FV = $948,360.78

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