SOLUTION: Sara Sharp, a 30-year-old insurance broker, decided to start a retirement plan. She figures that her income for the next 20 years will be sufficient to deposit $300 at the end of e

Question 1114871: Sara Sharp, a 30-year-old insurance broker, decided to start a retirement plan. She figures that her income for the next 20 years will be sufficient to deposit $300 at the end of each month into her retirement plan. She will then let the money sit for another 10 years until she is 60 years old. If Sarah�s retirement plan earns 5.75% compounded monthly, what amount will she have when she turns 60? and How much interest did she accumulate on her money over the 30 years?
Answer by addingup(3677) (Show Source): You can put this solution on YOUR website!
The first 20 years:
Future Value = 300[[[{1+(0.0575/12)}^(12*20)]-1]/(0.0575/12)]
= 300[[{(1.00479)^240}-1]/0.00479]
= 300(2.1483/0.00479)
= 300(448.49690) = 134,549.07 this is what she has at the end of 20 years. And she lets it sit for another 10 year earning 5.75% compounded monthly:
Future value = 134,549.07{(1+(0.0575/12))^(12*10)}
= 134,549.07(1.774) = 238,735.48 this is how much she will have at the end of 30 years

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