5. You deposit $5000 each year into an account earning 5% interest compounded annually. How much will you have in the account in 30 years? 6. Suppose you want to have $500,000 for retirement in 25 years. Your account earns 5% interest. a) How much would you need to deposit in the account each month? b) How much interest will you earn?
Added by John E.
Step 1
In this case, P = $5000, r = 0.05, and n = 30. FV = 5000 * [(1 + 0.05)^30 - 1] / 0.05 FV ≈ 332,193.07 So, after 30 years, you will have approximately $332,193.07 in the account. For question 6a, we will use the future value of an ordinary annuity formula Show more…
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