SOLUTION: The question is: You are working on saving for retirement. You will reach full retirement age in 20 years, and you can invest $5000 each year and can earn 7% annually during this

Algebra ->  Functions -> SOLUTION: The question is: You are working on saving for retirement. You will reach full retirement age in 20 years, and you can invest $5000 each year and can earn 7% annually during this      Log On


   

Question 923438: The question is: You are working on saving for retirement. You will reach full retirement age in 20 years, and you can invest $5000 each year and can earn 7% annually during this period. How much money will you have as you enter the retirement phase of your life, from this investment?
I cannot seem to find the formula for this. Please help!
Answer by jim_thompson5910(35256) About Me  (Show Source):
You can put this solution on YOUR website!
You will use the future value of annuity formula




Rate per period: r = 0.07 (in decimal form)
n = 20 since you have 20 periods (20 years, deposit annually)
P = 5000, the amount you deposit each year


FV+=+%28P%281%2Br%29%5En+-+1%29%2Fr


FV+=+%285000%281%2B0.07%29%5E20+-+1%29%2F0.07 Plug in the given values (see above)


FV+=+276391.747320441 Use a calculator here. You type in "(5000(1+0.07)^20 - 1)/0.07" without quotes


FV+=+276391.75 Round to the nearest penny


You will have $276,391.75 when you retire.

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Let me know if that helps or not. Thanks.

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