Contributing $1,500 to his retirement fund at the end of each year beginning at age 18 through age 50, with an average annual return of 12%, how much does Juan have in his retirement account at this time to use toward a possible early retirement?
i = .12
n = 50-18
= 32
amount = 1500( 1.12^32 - 1)/.01
= $457,271.58
where can you get 12% these days?
To calculate the amount Juan has in his retirement account, we need to use the formula for the future value of an ordinary annuity. The formula is:
FV = P * ((1 + r)^n - 1) / r
Where:
FV = Future value of the annuity
P = Amount contributed each year
r = Annual interest rate
n = Number of years
In this case:
P = $1,500
r = 12% = 0.12
n = 50 - 18 + 1 = 33 (from age 18 to 50, inclusive)
Let's substitute the values into the formula:
FV = $1,500 * ((1 + 0.12)^33 - 1) / 0.12
Using a calculator, we can simplify the equation and get the result.
FV = $1,500 * (74.038 - 1) / 0.12
FV = $1,500 * 73.038 / 0.12
FV = $917,070
Therefore, Juan has approximately $917,070 in his retirement account at this time.