Judy recently used an inheritance from her uncle to pay off her car loan. her mo
ID: 2731867 • Letter: J
Question
Judy recently used an inheritance from her uncle to pay off her car loan. her monthly car payments were $430 and now she must decide how she wants to invest the extra 5160 per year that she budgeted for car payments. She decides to invest this additional amount in her employer-sponsored retirement plan. Currently, the plan is averaging an 11% annual return. Judy has 11 years until retirement. How much more money will she have at retirement if she invests this additional amount. (assume that the account continues to earn 11% per year)
Explanation / Answer
We need to find the Future Value of 5160 Invested at 11% for 11 years. Future Value=5160*(1+0.11)^11 16263.07 Amount of money more at retirement will be 16263.07 or $ 16263
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