contestada

Travis invests $5,500 today into a retirement account. He expects to earn 9.2 percent, compounded annually, on his money for the next 13 years. After that, he wants to be more conservative, so only expects to earn 6 percent, compounded annually. How much money will he have in his account when he retires 25 years from now, assuming this is the only deposit he makes into the account?
A. $29,411.20
B. $42,003.12
C. $34,616.56
D. $41,919.67
E. $34,747.80

Respuesta :

jepessoa

Answer:

E. $34,747.80

Explanation:

first we must find the future value of the $5,000 in 13 years:

future value = $5,500 x (1 + 9.2%)¹³ = $17,268.59

now we must calculate the future value in 12 more years:

future value = $17,268.59 x (1 + 6%)¹² = $34,747.796 ≈ $34,747.80

since the account earns compound interest, we must use this formula, if the account earned simple interest, then the formula would be:

FV = deposit x [1 + (interest rate x number of years)]

Otras preguntas