5
QuizMultiple Choice

Retirement Planning — Test

Question 5 • Advanced Financial Algebra

Fernanda deposits $⁢450 monthly into a retirement account with a 3% annual interest rate compounded monthly. How much will the account have after 25 years? Use the formula cap A is equal to the fraction with numerator cap p times open paren open paren 1 plus r over n close paren raised to the n times t power minus 1 close paren and denominator r over n

Answer
A
162 dollars comma 382 point 5 4
B
374 dollars comma 0173 point 2 9
C
140 dollars comma 173 point 2 9
D
200 dollars comma 703 point 5 2

Explanation

Use the monthly annuity formula with P = $450, r = 0.03, n = 12, and t = 25. There are 12 × 25 = 300 deposits, and the monthly interest rate is 0.03 ÷ 12 = 0.0025. Substituting gives 450 × [((1.0025)^300 − 1) ÷ 0.0025] ≈ $200,703.52, so the account will have about $200,703.52. The correct choice is D, $200,703.52.

AI-written and checked against the verified answer.

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