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At the end of this month, Les will start saving $200 a month for retirement through his company's...

Question:

At the end of this month, Les will start saving $200 a month for retirement through his company's retirement plan. His employer will contribute an additional $.50 for every $1.00 that he saves. If he is employed by this firm for 30 more years and earns an average of 8.25% on his retirement savings, how much will he have in his retirement account 30 years from now?

$589,406.19 $401,005.25 $540,311.67 $470,465.70 $503,289.01

Future value of annuity:

The future value of annuity is the compounded sum of periodic payments made over a specified period of time. The future value depends on the sum invested, the interest rate and the number of periods. The formula can be used to calculate other variables if the future value is known. It is used in retirement planning to calculate the amount that one would have for retirement.

Answer and Explanation: 1

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The Future Value of annuity can be represented as:

{eq}FV=P\times \frac{(1+r)^{n}-1}{r} {/eq}

Here:

Future value (FV) has to be calculated.

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How to Find the Value of an Annuity

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Chapter 21 / Lesson 15
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An annuity is a type of savings account that pays back the investor in the future. Learn the formula used to calculate an annuity's value, and understand the importance of labeling specific numbers to calculate an output over time.

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