what are the steps to solving this problem ? Mike at age 30 had $15,000 in his r

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what are the steps to solving this problem ?

Mike at age 30 had $15,000 in his retirement account. At 30 he also started saving $400 at the end of every month for retirement. His employer matched his total contribution on a monthly basis. At 42, Mike quit his job and stopped savings. His employer's contribution also ceased at that point. What would be value of Mike's retirement account when he is 62, if his retirement account earn 6% per year?

$637,839 correct

$454,837

$787,820

$637,839

$658,338

$637,839 correct

$454,837

$787,820

$637,839

$658,338

Explanation / Answer

Amount in retirement account $15,000 Amount at end of 12 years would be for 15000 = 15000 x (1+.06/12)^144 $30,761 Amount deposited at the end of each month $     800 Total number of months for which the payment was deposited = 12x12 144 Since the payment is at the end of the month we will use future value of ordinary annuity formula: 800 x (((1+.005)^144 -1) / .005) $168,120 Total amount at the end of 42 years = 30761 + 168120 $198,881 Amount at the end of 62 years = 198881 x (1+.005)^240 $637,839

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