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College Algebra
1st Edition
ISBN:9781938168383
Author:Jay Abramson
Publisher:Jay Abramson
Chapter6: Exponential And Logarithmic Functions
Section: Chapter Questions
Problem 5RE: A retirement account is opened with an initialdeposit of 8,500 and earns 8.12 interest compounded...
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An individual is 48 years old. At the end of each month, he deposits $270 in a retirement account that pays 4.86% interest compounded monthly.
(a) After 12 years, what is the value of the account?
(b) If no further deposits or withdrawals are made to the account, what is the value of the account when the individual reaches age 65?
(a) For the first 12 years, the individual's deposits form an
v because the deposits are made at the
of each period.
Therefore, the formula
V should be used, After 12 vears, the account
to behave as an annuity
and
V formula should be used.
Transcribed Image Text:An individual is 48 years old. At the end of each month, he deposits $270 in a retirement account that pays 4.86% interest compounded monthly. (a) After 12 years, what is the value of the account? (b) If no further deposits or withdrawals are made to the account, what is the value of the account when the individual reaches age 65? (a) For the first 12 years, the individual's deposits form an v because the deposits are made at the of each period. Therefore, the formula V should be used, After 12 vears, the account to behave as an annuity and V formula should be used.
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