Don opened a retirement account with an APR of 3.25% compounded monthly.He is planning to retire in 15 years.About how much will he have in the account when he retires if he deposits $750 a month?
A) $173,677.27
B) $165,812.50
C) $73,677.21
D) $65,812.50

Question

Quizplus · Accepted Answer

We can use the formula for compound interest:

A = P(1 + r/n)^(nt)

where A is the final amount, P is the initial deposit (or principal), r is the annual interest rate (as a decimal), n is the number of times the interest is compounded per year, and t is the time (in years).

In this case, P = 750 (since that's how much Don deposits each month), r = 0.0325 (since the APR is 3.25%), n = 12 (since the interest is compounded monthly), and t = 15 (since that's how many years Don will be saving).

First, we need to calculate the total number of deposits that Don will make over the 15 years:

15 years x 12 months/year = 180 months

So Don will make 180 deposits of $750 each.

Now we can plug in the numbers and solve for A:

A = 750(1 + 0.0325/12)^(12*15)
A ≈ $173,677.27

Therefore, the best choice is A, and Don will have approximately $173,677.27 in his retirement account when he retires.

Don Opened a Retirement Account with an APR of 3