Suppose a 40-year-old person deposits $12 comma 00012,000 per year in an individual retirement account until age 65. find the total in the account with the following assumption of an interest rate. (assume quarterly compounding, with payments of $3 comma 0003,000 made at the end of each quarter period.) find the total amount of interest earned. 55%

 interest earned = $8942372340

$8942672340 this is amount after 25 years.

Explanation:

formula used:    S= R*[ (1+i )ⁿ-1 / i ]

where:

S is future value

R is periodic payment

i is interest rate period

n is number of periods

R= $3000

n= 65-40=25   now 25*4=100   QUARTERLY that is why we used 4

i = 55% which is equal to 0.55

so, for quarterly i= 0.55/4= 0.138

now putting them in formula given above

S= 3000*[ (1+0.138)¹⁰⁰-1] / 0.138

S= $8942672340 (future value )

total money deposited = number of period * periodic amount

                                        = $3000*100 = $300,000

interest earned = future value - total money deposited

                           = 8942672340 - 300,000

 interest earned = $8942372340

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