You have just made your first $5000 contribution to your retirement account

Finance Aug 20, 2020

You have just made your first $5000 contribution to your retirement account. Assuming you earn an 11 % rate of return and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait 10 years before contributing?

Expert Solution

FV= PV* (1+ r)^ t

= 5000* (1+ 11%)^ 45

= $547,651.21

The no. of years would decreased by 10 years. So "t" would be 35 (45- 10)

FV= PV* (1+ r)^ t

= 5000* (1+ 11%)^ 35

= $ 192,874.26

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