Question

The following table shows the average returns for some of the largest mutual funds commonly found in retirement plans. (Assume end-of-month deposits and withdrawals and monthly compounding, and assume that the quoted rate of return continues indefinitely.) Mutual Fund Fidelity Growth Company Vanguard 500 Index PIMCO Total Return Vanguard Total Bond Market Index Rate of Return 14.83% 14.25% 3.77% 3.67% Type Stock fund Stock fund Bond fund Bond fund How much would be accumulated after 25 years in a retirement account invested entirely in the Vanguard stock fund with payments of $400 per month? HINT (See Quick Example 1.] (Round your answer to the nearest cent.)

Answer 1

For the calculation of accumulated amount, use the following formula.

Accumulatedamount = Depositamount * [[1+

Deposit amount = $400

rate of interest = 14.25% per month

number of periods = 12

time = 25 years

Accumulated amount = $ 1,129,065.40