If the account earns 7.8%, compounded annually, how much will be in the account 26 years from today?

Question

You plan to save $24,423/ year for the next 15 years. After the last deposit, you will keep the money in the account for an additional 11 years. If the account earns 7.8%, compounded annually, how much will be in the account 26 years from today?

Answer 1

So we need to break this up into 2 parts: a 15 year annuity followed by an 11 year future value formula.

Starting with the annuity 24423((1+.078)^15-1)/.078 = $652,903.95

Now we future value it 652903.95(1.078^11) = $1,491,611.31