Question

Shortly after graduating from NAU, Skylar was hired as an assistant curator at a major museum in Pasadena, California. Having discussed the details of his new employer's retire- ment package with his financial planner, Skylar plans on depositing $985 each month into his retirement account, which has an APR of 2.04%. Skylar only intends to make these monthly invests until age 50, making no deposits or withdrawals thereafter until he retires at age 65. If Skylar begins investing now, at age 23, how much will he have saved when he is 65?

Answer 1

Here

Payment = 985

APR = 2.04%

Time till 50 = 27 years

Amount at age of 50 years = $425,189.25 (using FV formula in excel)

Amount at age of 65 years = P (1 + r )$^{t}$

= 425,189.25 (1+ 0.0204)

15

Savings when he will be 65 years old   = $575,624.17