Answer:
approximately $5028.60
To calculate how much Tina will have in her retirement account in 30 years, we can use the formula for compound interest, in which:
- A = the amount of money accumulated after n years, including interest.
- P = the principal amount (the initial amount of money).
- r = annual interest rate (decimal).
- n = number of times that interest is compounded per year.
- t = time the money is invested for in years.
Given information:
- Tina contributes $500 per month, so monthly contribution (P) = $500.
- Tina's employer matches her contribution, so the total monthly contribution = $500 + $500 = $1000.
- Annual interest rate (r) = 9.75% = 0.0975 (as a decimal).
- Interest is compounded monthly, so the number of compounding periods per year (n) = 12.
- Time (t) = 30 years.
Substitute those values into the formula:
A = 1000 × (1+0.008125)³⁶⁰
A = 1000 × (1.008125)³⁶⁰
A ≈ 1000 × 5.028601
A ≈ 5028.601
Round 5028.601 to $5028.60
