A 41-year old woman has $398,100.00 in an IRA account. Due to medical concerns of a family member, she decided to make no additional contributions to the account but expect it to grow at 8% compounded every 4 months. How much does she expect to have in the account when she retires at age 65?

Answers

Answer 1

She expects to have $2710591.78 when she retires at age 65 with the principal amount is 398100, the interest rate is 8%, time period is 24 and number of times interest applied is 3 by the concept of compound interest.

What is compound interest?

Interest that is paid on the principal and interest at regular periods is known as compound interest. The interest is calculated for the new principal at regular intervals after the interest that has already accumulated has been combined with the existing principal amount. The initial principal plus the interest that has accrued thus far are added together to form the new principal.

Interest on the principal + periodic compound = compound interest.

According to the question the principal amount is 398100, the interest rate is 8%, time period is 24 and number of times interest applied is 3.

Here the interest is compounded every 4 months

So, the formula of compound interest is as follows:

A=p (1+ [tex]\frac{r}{n}[/tex]) ∧ (n× t)

Where P is the principal balance, r is the interest rate, n is the number of times interest is compounded per year and t is the number of years.

Here the interest is compounded every 4 months hence the value of n is 12/4 which is equal too 3.

Insert the values of p, n, t, r in above equation,

A=398100(1+[tex]\frac{8}{300}[/tex]) ∧ (3×24)

A=398100× (1.027) ∧ (72)

A=398100×6.809

A=2710591.78

She expects to have amount $2710591.78 when she retires at age 65.

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Assume that females have pulse rates that are normally distributed with a mean of j = 74.0 beats per minute and a standard deviation of o = 12.5 beats per minute. Complete parts (a) through (c) below.
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