Question

Cameron is saving for his retirement 22 years from now by setting up a savings plan. He has set up a savings plan wherein he will deposit $121.00 at the end of each year for the next 15 years. Interest is 9% compounded annually.

(a) How much money will be in his account on the date of his retirement?
(b) How much will Cameron contribute?
(c) How much will be interest?

Answer 1

Cameron will have approximately $2,420.09 in his account on the date of his retirement. He will contribute a total of $1,815.00 over the 15-year period. The interest earned will be approximately $605.09.

Step-by-step explanation:

To calculate the amount of money that will be in Cameron's account on the date of his retirement, we can use the formula for compound interest. The formula is: A = P(1+r)^n, where A is the final amount, P is the principal amount, r is the interest rate, and n is the number of years. In this case, Cameron will deposit $121.00 annually for 15 years, so P = 121, r = 9% = 0.09, and n = 15. Plugging these values into the formula, we get: A = 121(1+0.09)^15. Evaluating this expression, we find that the amount of money in Cameron's account on the date of his retirement is approximately $2,420.09.

To calculate the total amount contributed by Cameron, we can multiply the annual deposit amount of $121.00 by the number of years, which is 15. Therefore, Cameron will contribute a total of $1,815.00 over the 15-year period.

The interest earned can be calculated by subtracting the total contribution from the final amount. So the interest is approximately $605.09.