At the end of each quarter, a 49-year-old individual puts $1400 in a retirement account that pays 9.2% interest compounded quarterly.(a) When the individual reaches age 60, what is the value of the account?(b) If no further deposits or withdrawals are made to the account, what is the value of the account when the individual reaches age 65?(a) Up to age 60, the individual's deposits form anshould be used. After age 60, the accountbecause the deposits are made at theof each period. Therefore, the formulato behave as an annuity andformula should beused.

Step 1: Step 2:The calculation involves compound interest, which means that not only the initial…

Answered: At the end of each quarter, a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 36P

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An individual is 42 years old. At the end of each month, he deposits $320 in a retirement account that pays 5.42% interest compounded monthly (a) After 10 years, what is the value of the account? (b) If no further deposits or withdrawals are made to the account, what is the value of the account when the individual reaches age 65? (a) For the first 10 years, the individual's deposits form an period. Therefore, the formula behave as an annuity and formula should be used. 4 because the deposits are made at the should be used. After 10 years, the account ➤ of each to
At the end of each quarter, a 50-year-old individual puts $1100 in a retirement account that pays 7.4% interest compounded quarterly. (a) When the individual reaches age 60, what is the value of the account? (b) If no further deposits or withdrawals are made to the account, what is the value of the account when the individual reaches age 65? (a) Up to age 60, the individual's deposits form an because the deposits are made at the should be used. After age 60, the account of each period. Therefore, the formula to behave as an annuity and formula should be used.
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In 2012 the maximum Social Security deposit by an individual was $8,386.75. Suppose you are 27 and make a deposit of this amount into an account at the end of each year. How much would you have (to the nearest dollar) when you retire if the account pays 2% compounded annually and you retire at age 65?_____$
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An individual earns an extra $2000 each year and places this money at the end of each year into an Individual Retirement Account (IRA) in which both the original earnings and the interest in the account are not subject to taxation. If the account has an annual interest rate of 11.8% compounded annually, how much is in the account at the end of 45 years? (Round your answer to the nearest cent.)
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