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Mrs
Mrs. Simpson is saving for her retirement. If she makes a payment of $1000 at the end of each month for 15 years and earns a rate of 5.25% compounded 12 times per year how much will she have in her retirement account when she is ready to retire?
Expert Solution
Computation of Accumulated Amount using FV Function in Excel:
=-fv(rate,nper,pmt,pv)
Here,
FV = Accumulated Amount or Future Value = ?
Rate = 5.25%/12
Nper = 15 years * 12 months = 180 months
PMT = $1,000
PV = 0
Substituting the values in formula:
=-fv(5.25%/12,180,1000,0)
FV or Accumulated Amount or Future Value = $272,942.36
So, she will have $272,942.36 in her retirement account when she is ready to retire.
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