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A small business owner contributes $3000 at the end of each quarter to a retirement account...

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Question

Basic Math

A small business owner contributes $3000 at the end of eachquarter to a retirement account that earns 8% compoundedquarterly.

(a) How long will it be until the account is worth $150,000?(Round your answer UP to the nearest quarter.)

quarters

(b) Suppose when the account reaches $150,000, the businessowner increases the contributions to $7000 at the end of eachquarter. What will the total value of the account be after 15 moreyears? (Round your answer to the nearest dollar.)

$

Answer & Explanation Solved by verified expert
3.6 Ratings (380 Votes)
The future value F of an annuity is given by F Pr1rn1 where P is the periodic payment r is the rate per period and n is the number of periods a Here P 3000 r 8400 002 and F 150000 Therefore 150000 3000002102n1 150000102n1 or 102n1    See Answer
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