# Answered Essay: Please show all work and if you know how to enter it in Excel as PMT.

Please show all work and if you know how to enter it in Excel as PMT.

Upon graduating from college 35 years ago, Dr. Nick Riviera was already planning for his retirement. Since then, he has made deposits into a retirement fund on a monthly basis in the amount of \$100. Nick has just completed his final payment and is at last ready to retire. His retirement fund has earned 6 percent compounded monthly. Use five decimal places for the periodic interest rate in your calculations. a. How much has Nick accumulated in his retirement account? b. In addition to this, 10 years ago Nick received an inheritance check for \$25,000 from his beloved uncle. He decided to deposit the entire amount into his retirement fund. What is his current balance in the fund? a. The amount Nick has accumulated in his retirement account is \$ (Round to the nearest cent.) b. The amount the \$25,000 inheritance check has accumulated to over 10 years is \$ (Round to the nearest cent.) The current balance in Nick’s retirement fund is \$ (Round to the nearest cent.)

Answer (a)- This question is of “Future value of Annuity”

Formula- FV = PMT [(1+r)n – 1] / r

Where- FV = Future value, PMT = Present Principal, r = rate of interest, n = number of periods.

Given- PMT = \$100, Frequency = Monthly, r = 6% /12 = .5%, n = 35*12 = 420 Periods

Putting all the values in the formula, we get-

FV = 100 [ (1+.005)420 – 1] / .005

FV = 100 * 1424.710298

FV = \$142471.0298

Answer (b)- This question is of normal future value-

FV = Present value (1+r)n

Given- PV = \$25000, r = 6%, n = 10 years

Putting the values in the formula, we get-

FV = 25000 (1+.06)10

FV = 25000 * 1.790847

FV = \$44771.175

Final Answer- The current balance in Nock’s retirement fund is = \$142471.0298 + \$44771.175

=\$187242.2048

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