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Upon graduating from college 40 years ago, Dr
Upon graduating from college 40 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 $160. Nick has just completed his final payment and is at last ready to retire. His retirement fund has earned 7 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. The amount Nick has accumulated in his retirement account is $. (Round to the nearest cent)
Expert Solution
a.Information provided:
Monthly payment= $160
Time= 40 years*12 = 480 months
Monthly interest rate= 7% /12 = 0.5833%
The question is solved by computing the future value of annuity.
Enter the below in a financial calculator to calculate the future value of annuity:
PMT= -160
N= 480
I/Y= 0.5833
Press the CPT key and FV to compute the future value.
The value obtained is 419,970.14
Therefore, Nick accumulated $419,970.14 in his retirement account.
b. Information provided:
Present value= $30,000
Time= 15 years*12 = 180 months
Monthly interest rate= 7% /12 = 0.5833%
The question is solved by computing the future value.
Enter the below in a financial calculator to calculate the future value:
PV= -30,000
N= 180
I/Y= 0.5833
Press the CPT key and FV to compute the future value.
The value obtained is 85,468.40.
Therefore, the current balance in the fund is $85,468.40.
In case of any query, kindly comment on the solution.
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