Question

Simona Ramones, who is 60 years old, has just inherited $600,000 and decides to use the...

Simona Ramones, who is 60 years old, has just inherited $600,000 and decides to use the money towards her retirement. She places the money in a bank, which promises a return of 4% per year until her planned retirement at age 65. If her funds earn 4% interest compounded monthly, a) How much will she have at retirement?

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Answer #1

Information provided:

Present value= $600,000

Time= 65 years - 60 years = 5 years*12 = 60 months

Monthly interest rate= 4%/12 = 0.3333%

The question is solved by computing the future value.

Enter the below to calculate the future value:

PV= -600,000

N= 60

I/Y= 0.3333

Press the CPT key and FV to calculate the future value.

The value obtained is 732,597.96.

Therefore, she will have $732,597.96 at retirement.

In case of any query, kindly comment on the solution.                                                    

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