On Juan\'s 26th birthday, he invested $8,500 in a retirement account. Each year

Question

On Juan's 26th birthday, he invested $8,500 in a retirement account. Each year thereafter, he deposited 7% more than the previous deposit. The account paid annual compound interest of 5%. How much was in the account immediately after his 35th deposit? Round your answer to the nearest dollar. The tolerance is +/- 5 F=$ Click here to access the TVM Factor Table Calculator SHOW HINT GO TUTORIAL If Juan decided to wait 10 years before investing for retirement, how much would he have to invest on his 36th birthday to have the same account balance on his 60th birthday? Round your answer to the nearest dollar. The tolerance is +/- 5. Click here to access the TVM Factor Table Calculator SHOW HINT GO TUTORIAL What uniform annual investment is required to achieve the same account balance? Round your answer to the nearest dollar. The tolerance is +/- 5. A-$

Explanation / Answer

1.
Amount in his account after 35 deposits
F=8500*1.05^34+8500*1.07*1.05^33......8500
F=8500*1.05^34*((1.07/1.05)^35-1)/(1.07/1.05-1)
F=2193240.5997

2.
Amount needed with 7% growth each year if he starts investing at 26
A1=2193240.5997/(1.05^24)*(1.07/1.05-1)/((1.07/1.05)^25-1)
A1=21491.01

3.
Uniform amount needed each year if he starts investing at 26
A2=2193240.5997/(1.05^34)*(1/1.05-1)/((1/1.05)^35-1)
A2=24282.92

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