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3. Isaiah reads articles about the insufficient savings of those in retirement and decides he needs to start saving now, even though he's in
his 50s. He saves $500 per month for 15 years and earns 7% by investing in the stock market through an index fund. What is the value
of his retirement account after 15 years?

Respuesta :

Value of investment after 15 years will be $159,405.62

(or) $159,405 (rounded off)

Explanation:

value of retirement account after 15 years

Given information's are

His monthly savings = $500

Interest rate = 7%

Period = 15 years

Value of investment = ((P×(1+i)^n) + P),

where P is the principal,

i is the annual interest rate, and

n is the number of periods

Total investment = $500×12×15 = 90,000

Interest earned

= ((P×(1+i)^n) + P) = (6000 × (1-0.07)15) - 6000) = $69,405.62

Value of investment = (6000 × (1-0.07)15) + 6000) = $159,405.62

[tex]Value of investment = (6000 × (1-0.07)15) + 6000) = $159,405.62[/tex]