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Lena has just become eligible to participate in her​ company's retirement plan. Her company does not match​ contributions, but the plan does average an annual return of 14​%. Lena is 40 and plans to work to age 65. If she contributes ​$200 per​ month, how much will she have in her plan at​ retirement?

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Answer:

Final Value= $543,139.58

Explanation:

Giving the following information:

The plan has an average annual return of 14​%. Lena is 40 and plans to work to age 65. She contributes ​$200 per​ month.

First, we need to determine the monthly interest rate:

Interest rate= 0.14/12= 0.0117

Now, using the following formula, we can calculate the final value:

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit= 200

i= 0.0117

n= 25*12= 300

FV= {200*[(1.0117^300)-1]}/ 0.0117= $543,139.58

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