Delores has an investment account (Account # 1) with a current balance of $160,000. Delores plans to contribute approximately $1,550 to the account each month until she retires. The account has averaged a return of about 9.25% (APR), compounded monthly, and that is expected to continue. Delores also has an IRA (Account #2). It has a current balance of $32,800. She plans to contribute an additional $5,000 to that account each year until she retires. The IRA has averaged a return of about 5.50% annually, compounded annually, and this is also expected to continue. Delores plans to retire in about 28 years. (a) What will be the balance in Account #1 when Delores retires? (b) What will be the balance in the IRA (Account #2) when Delores retires? (c) How much will Delores have in total when she retires if she combines the balances of both accounts into one (1) account?
Delores has an investment account (Account # 1) with a current balance of $160,000. Delores plans to contribute approximately $1,550 to the account each month until she retires. The account has averaged a return of about 9.25% (APR), compounded monthly, and that is expected to continue. Delores also has an IRA (Account #2). It has a current balance of $32,800. She plans to contribute an additional $5,000 to that account each year until she retires. The IRA has averaged a return of about 5.50% annually, compounded annually, and this is also expected to continue. Delores plans to retire in about 28 years. (a) What will be the balance in Account #1 when Delores retires? (b) What will be the balance in the IRA (Account #2) when Delores retires? (c) How much will Delores have in total when she retires if she combines the balances of both accounts into one (1) account?
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN:9781337117005
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter14: Planning For Retirement
Section: Chapter Questions
Problem 3FPE
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Transcribed Image Text:Question #41
Delores has an investment account (Account #1) with a current balance of
$160,000. Delores plans to contribute approximately $1,550 to the account each
month until she retires. The account has averaged a return of about 9.25 % (APR),
compounded monthly, and that is expected to continue.
Delores also has an IRA (Account # 2). It has a current balance of $32,800. She
plans to contribute an additional $5,000 to that account each year until she retires.
The IRA has averaged a return of about 5.50% annually, compounded annually, and
this is also expected to continue.
Delores plans to retire in about 28 years.
(a) What will be the balance in Account #1 when Delores retires?
(b) What will be the balance in the IRA (Account #2) when Delores retires?
(c) How much will Delores have in total when she retires if she combines the
balances of both accounts into one (1) account?
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