Question

A young engineer decides to save $240 per year toward retirement in 40 years. If he invests this sum at the end of every year at 9%, then how much will be accumulated by retirement time

Answer 1

Answer:

Future value of annuity = $81,091.80 (Approx)

Explanation:

Given:

Amount deposit per year A = $240

Number of year n = 40

Rate r = 9% = 0.09

Find:

Future value of annuity

Computation:

$Future\ value\ of\ annuity\ = \frac{A[(1+r)^n-1]}{r}\\\\Future\ value\ of\ annuity\ = \frac{240[(1+0.09)^{40}-1]}{0.09}\\\\Future\ value\ of\ annuity\ = 81,091.798$

Future value of annuity = $81,091.80 (Approx)