Question 23 (1 point) Consider that you are 30 years old and have just changed t

Question

Question 23 (1 point) Consider that you are 30 years old and have just changed to a new job. You have $91,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $4,800 each year into your new employer's plan. If the rolled-over money and the new contributions both earn a 7% return, how much should you expect to have when you retire in 38 years? A) $2,018,506.60 B)$2.216,781.60 C) $2.012.560.60 D)$2.106.718.60

Explanation / Answer

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence

A=$91000(1.07)^38

Also:

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

=$4800[(1.07)^38-1]/0.07

Hence total future value=$91000(1.07)^38+$4800[(1.07)^38-1]/0.07

=(91000*13.07927141)+(4800*172.5610202)

which is equal to

=$2,018,506.60(Approx).

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