Question

1. Lulu started saving $200/month in a 401(k) earning 6% interest compounded monthly when she was 45 years old. How much will be in her account when she retires at age 65

Answer 1

Answer:

Lulu's account will be equal to $48,287.94

Explanation:

a) Data and Calculations:

Savings in 401(k) = $200 per month

Interest rate = 6% compounded monthly

Period of savings = 20 years

Future value is determined using online calculator:

Results

FV (Future Value) $48,287.94

PV (Present Value) $47,711.96

N (Number of Periods) 240.000

I/Y (Interest Rate) 0.005%

PMT (Periodic Payment) $200.00

Starting Investment $0.00

Total Principal $48,000.00

Total Interest $287.94