Investments

[Happydesta]

I have been reading through my materials and can't figure out what formula I use to solve this question.

Katie has $250,000 in her retirement account deposit at her present company. Because she is assuming a new position with another company, Katie is planning to roll over her assets to a new account. Katie also plans to put $3000 per quarter into the new account until her retirement 20 years from now. If the account earns interest at the rate of 8% per year compounded quarterly, how much will Katie have in her account at the time of her retirement?

I thought maybe it was this?

A=250,000+3000(1+.08)^80
A=1,665,864.50

I used an online investment calculator to check my answer and got around 1.8 million.

 

[Denis]

I have been reading through my materials and can't figure out what formula I use to solve this question.

Katie has $250,000 in her retirement account deposit at her present company. Because she is assuming a new position with another company, Katie is planning to roll over her assets to a new account. Katie also plans to put $3000 per quarter into the new account until her retirement 20 years from now. If the account earns interest at the rate of 8% per year compounded quarterly, how much will Katie have in her account at the time of her retirement?

I thought maybe it was this?

A=250,000+3000(1+.08)^80
A=1,665,864.50

I used an online investment calculator to check my answer and got around 1.8 million.

Do a google search on "financial formulas"; you'll get sites like:
http://www.kbapps.com/finance.html

Needs to be done in 2 parts:

250000(1.02^80) = ?

3000(1.02^80 - 1) / .02 = ?

Add 'em up ... you should end up with 1,800,175.66 [hmmm...I'd like to meet Katie!]