Alexus starts saving for retirement at age 35. If she deposits $1000 each month in an account that pays 6.9% interest, how much has Alexus saved by the time she retires at age 62?
$940,652
$146,776
$324,000
$6,409
$327,027
To calculate how much Alexus has saved by the time she retires at age 62, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/retirement savings
P = the principal deposit (monthly deposit of $1000)
r = annual interest rate (6.9% or 0.069)
n = number of times interest is compounded per year (assuming monthly compounding, so n = 12)
t = number of years
Plugging in the values and solving for A:
A = $1000(1 + 0.069/12)^(12*(62-35))
A = $1000(1 + 0.00575)^324
A = $1000(1.00575)^324
A = $1000 * 327.027
A = $327,027
Therefore, by the time Alexus retires at age 62, she will have saved $327,027.