Question

Leon and Heidi decided to invest $2,750 annually for only the first nine years of their marriage. The first payment was made at age 20. If the annual interest rate is 8% how much accumulated interest and principal will they have at age 652 The accumulated interest and principal will equal $ (Round to the nearest dollar)

Answer 1

Annual amount deposited = $2,750

This annual deposit will be made for 1st nine years.

They have made first deposit at the age of 20 and would retire at the age of 65.

Calculate the amount accumulated at the end of 9 years -

Amount accumulated = Annual deposit (F/A, i, n)

Amount accumulated = $2,750 (F/A, 8%, 9)

Amount accumulated = $2,750 * 12.4876

Amount accumulated = $34,340.90

The amount accumulated at the end of 9 years is $34,340.90

This amount will remain deposited for another 36 years.

Calculate the final amount accumulated -

Final amount = Amount accumulated in 9 years (F/P, i, n)

Final amount = $34,340.90 (F/P, 8%, 36)

Final amount = $34,340.90 * 15.96817 = $548,361.32

So,

The accumulated interest and principal will equal $548,361.