SOLUTION: Luis has $110,000 in his retirement account at his present company. Because he is assuming a position with another company, Luis is planning to "roll over" his assets to a new acco

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Question 1148922: Luis has $110,000 in his retirement account at his present company. Because he is assuming a position with another company, Luis is planning to "roll over" his assets to a new account. Luis also plans to put $2000/quarter into the new account until his retirement 25 years from now. If the new account earns interest at the rate of 3.5%/year compounded quarterly, how much will Luis have in his account at the time of his retirement? Hint: Use the compound interest formula and the annuity formula. (Round your answer to the nearest cent.)
Answer by ikleyn(52787)   (Show Source): You can put this solution on YOUR website!
.

It works as a combination of two separate accounts:


    - one account is fixed principal of $110000 earning 3.5% compounded quarterly during 25 years, and


    - the second account is a classic Ordinary Annuity plan with the regular quarterly deposits of $2000 
      compounded quarterly at 3.5% annual percent rate.



For the first account, the formula and the final asset are

    Future value F1 =  = $262873.89


For the second account, the formula and the final asset are

    Future value F2 =  =  = $317660.04.


Now the answer is the sum  F1 + F2 = $262873.89 + $317660.04 = $580533.93.

Solved.



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