A 40yearold consulting engineer wants to set up a retirement

A 40-year-old consulting engineer wants to set up a retirement fund to be used starting at age 65. $20,000 is invested now at 6% compounded annually. Approximately now much money will be in the fund at retirement? 1.$84,000 2.$86,000 3.$88,000 4.$92,000

Solution

principal = $20,000

interest = $6

time = 65-40 = 25 yrs

Amount = Principal( 1 +0.06)^(25)

= 20000( 1.06)^25

= $ 85837.4

= $ 86000 ( approx.)

Option 2