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1 March, 17:31

Lena has just become eligible to participate in her company's retirement plan. Her company does not match contributions, but the plan does average an annual return of 14 %. Lena is 40 and plans to work to age 65. If she contributes $200 per month, how much will she have in her plan at retirement?

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  1. 1 March, 17:46
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    Final Value = $543,139.58

    Explanation:

    Giving the following information:

    The plan has an average annual return of 14 %. Lena is 40 and plans to work to age 65. She contributes $200 per month.

    First, we need to determine the monthly interest rate:

    Interest rate = 0.14/12 = 0.0117

    Now, using the following formula, we can calculate the final value:

    FV = {A*[ (1+i) ^n-1]}/i

    A = monthly deposit = 200

    i = 0.0117

    n = 25*12 = 300

    FV = {200*[ (1.0117^300) - 1]} / 0.0117 = $543,139.58
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