You have just made your first $4,000 contribution to your retirement account. Assume you earn a return of 14 percent per year and make no additional contributions. a. What will your account be worth when you retire in 25 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b. What if you wait 10 years before contributing? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

Question

Charity Morales

Business

3 June, 01:29

You have just made your first $4,000 contribution to your retirement account. Assume you earn a return of 14 percent per year and make no additional contributions. a. What will your account be worth when you retire in 25 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b. What if you wait 10 years before contributing? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

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Answers (1)

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Chi Chi · Answer 1

Instructions are listed below.

Explanation:

Giving the following information:

You have just made your first $4,000 contribution to your retirement account. Assume you earn a return of 14 percent per year and make no additional contributions.

To calculate the final value, we need to use the following formula:

FV=PV * (1+i) ^n

A) n = 25 years

FV = 4,000 * (1.05^25) = $13,545.42

B) Wait 10 years:

n = 15

FV = 4,000 * (1.05^15) = $8,315.71