document.write( "Question 1169702: Eugene began to save for his retirement at age 29, and for 11 years he put $ 500 per month into an ordinary annuity at an annual interest rate of 9% compounded monthly. After the 11 years, Eugene was unable to make the monthly contribution of $ 500, so he moved the money from the annuity into another account that earned 12% interest compounded monthly. He left the money in this account for 25 years until he was ready to retire. How much money did he have for retirement? \n" ); document.write( "

Algebra.Com's Answer #851297 by ikleyn(52814) $\"\"$ $\"About$

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\n" ); document.write( "Eugene began to save for his retirement at age 29, and for 11 years he put $ 500 per month
\n" ); document.write( "into an ordinary annuity at an annual interest rate of 9% compounded monthly.
\n" ); document.write( "After the 11 years, Eugene was unable to make the monthly contribution of $ 500,
\n" ); document.write( "so he moved the money from the annuity into another account that earned 12% interest compounded monthly.
\n" ); document.write( "He left the money in this account for 25 years until he was ready to retire.
\n" ); document.write( "How much money did he have for retirement?
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document.write( "Solve it in two steps.\r\n" );
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document.write( "First, determine future value FV1 of the account after first 11 years.  \r\n" );
document.write( "Use the standard formula for the ordinary annuity\r\n" );
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document.write( "    FV1 =  = 112,087.42 dollars.\r\n" );
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document.write( "Next, find future value FV2 of this amount, $112,087.42, in the another account that earned 12%\r\n" );
document.write( "annual interest rate, compounded monthly\r\n" );
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document.write( "    FV2 =  =  = $2,218,038.13.\r\n" );
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document.write( "ANSWER.  Eugene will have $2,218,038.13 for retirement.\r\n" );
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