Asked by Aaron Silver on May 18, 2024
Verified
What is the value of a $3,500 deposit into a retirement plan if the investment earns 10.5% per year for 20 years?
A) $12,174
B) $25,782
C) $14,652
D) $15,523
Retirement Plan
A financial arrangement designed to replace employment income upon retirement, often involving contributions from both employers and employees.
Investment Earnings
Income generated from investing capital, including dividends, interest, and capital gains.
- Incorporate the principle of time value of money into retirement saving and investment strategy development.
- Become acquainted with the importance of making regular contributions and how they affect the future accumulation of retirement wealth.
Verified Answer
JA
Joseph AbrahamMay 21, 2024
Final Answer :
B
Explanation :
FV(3,500) = $3,500 × (1 + 0.105)20 = $25,782
Calculator entries are N = 20, I/Y = 10.5, PV = −3,500, PMT = 0, CPT FV → 25,782.
Calculator entries are N = 20, I/Y = 10.5, PV = −3,500, PMT = 0, CPT FV → 25,782.
Learning Objectives
- Incorporate the principle of time value of money into retirement saving and investment strategy development.
- Become acquainted with the importance of making regular contributions and how they affect the future accumulation of retirement wealth.
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