Question

Logan starts an IRA (Individual Retirement Account) at the age of 28 28 to save for retirement. He deposits $400 $ ⁢ 400 each month. Upon retirement at the age of 65 65 , his retirement savings is $1,161,278.01 $ ⁢ 1,161,278.01 . Determine the amount of money Logan deposited over the length of the investment and how much he made in interest upon retirement.

Answer 1

Answer:

A) Total amount deposited over the length of investment = $177600

B) Interest accrued upon retirement = $1,043,678.01

Step-by-step explanation:

From the question, we can see that he started the savings at the age of 28 and ended when he retired at the age of 65. Thus, number of years = 65 - 28 = 37 years

We are told he deposited $400 each month and that upon retirement it had grown to $1,161,278.01.

Since he deposited $400 each month, in a year which has 12 months, he deposited;

Amount deposited each year = 12 × 400 = $4800

Now, it took 37 years before he retired which was the point at which he stopped the deposit.

Thus;

Total Amount deposited upon retirement = Amount deposited each year × number of years he deposited.

Thus;

Total amount deposited over the length of investment upon retirement = 4800 × 37 = $177600

Now,we have seen that his retirement savings reads $1,161,278.01.

Thus is way more than the deposits he made throughout his work years.

This means there was interest on the money.

Interest = $1,161,278.01 - $177600

Interest = $1,043,678.01