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    Calculating Future Value of Annuity

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    An employee works at the local hamburger restaurant for 40 years and never earns more than minimum wage, which is $12,000 a year. However, this employee is able to save 6% per year, or $720 per year. Over the 40 year period, the employee's investments average 8% interest per year. How much will the employee have in his or her retirement account at the end of the 40 years? What are your thoughts regarding this sum?

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    Please refer attached file for complete solution. Work done with the help of equation writer may not print here.


    Let us assume annual compounding.
    This is equivalent ...

    Solution Summary

    The solution explains the steps in calculating future value of an ordinary annuity with the help of formula.