Problema Solution
Robin, who is self-employed, contributes $4,000/year into a Keogh account. How much will he have in the account after 15 years if the account earns interest at the rate of 6.5%/year compounded yearly?
Answer provided by our tutors
R = $4,000
r = 0.065 or 6.5%
n = 15
S = future value
S = R[((1 + i)^n - 1)/i]
S = 4000[((1 + 0.065)^15 - 1)/0.065]
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S = $266,154
After 15 years Robin will have $266,154 in her account.