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Homework answers / question archive / Upon graduating from college 35 years? ago, Dr
Upon graduating from college 35 years? ago, Dr. Nick Riviera was already planning for his retirement. Since? then, he has made deposits into a retirement fund on a monthly basis in the amount of ?$120. Nick has just completed his final payment and is at last ready to retire. His retirement fund has earned 12 percent compounded monthly. Use five decimal places for the periodic interest rate in your calculations.
a. How much has Nick accumulated in his retirement? account?
b. In addition to? this, 15 years ago Nick received an inheritance check for ?$30,000 from his beloved uncle. He decided to deposit the entire amount into his retirement fund. What is his current balance in the? fund?
a). Computation of the future value of annuity:-
Future value of annuity = P*(((1+r)^n-1)/r)
Here,
Rate = 12%/12 = 1% (monthly)
n = 35*12 = 420 periods (monthly)
FV of annuity = $120*(((1+1%)^420-1)/1%)
= $120*6430.959
= $771,715.1366 Or $771,715
b). Computation of the current balance in fund:-
FV = PV*(1+rate)^n
Here,
n = 15*12 = 180 periods
= $30,000*(1+1%)^180
= $30,000*5.9958
= $179,874.0593
Total fund balance = $771,715.1366 + $179,874.0593
= $951,589.1958 Or $951,589
