document.write( "Question 1048411: You deposit $50,000 into a retirement account at the age of 20, making an average of 8% annual return. How much will you have at the age 65? \n" ); document.write( "

Algebra.Com's Answer #663992 by addingup(3677) $\"\"$ $\"About$

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If you start at 20 and you save until you are 65: 65-20 = 45 years of savings.
\n" ); document.write( "The formula we need to use is:
\n" ); document.write( "A = P(1+r)^t
\n" ); document.write( "A is the final amount
\n" ); document.write( "P is the principal, in this case 50000
\n" ); document.write( "r is the interest rate, in this case 0.08 or 8%
\n" ); document.write( "t is the time, in this case 45 years
\n" ); document.write( ":
\n" ); document.write( "Let's put it all together:
\n" ); document.write( "A = 50,000(1+0.08)^45 = 1,596,022.47
\n" ); document.write( "You are seeing correctly, 50,000 turn into over 1.5 million. This exercise is to teach you the power of compounding.
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