Carla Lopez deposits $1,500 a year into her retirement account. If these funds have an average earnings of 7 percent over the 40 years until her retirement, what will be the value of her retirement account at the time

$299,452.668

Explanation:

The computation of future value of annuity is shown below:-

Future value of annuity = Annuity × ((1 + rate)^Time period - 1) ÷ Rate

= $1,500 × ((1 + 0.07)^40 - 1) ÷ 0.07

= $1,500 × ((1.07)^40 - 1)) ÷ 0.07

=  $1,500 × (14.97445784  -1) ÷ 0.07

=  $1,500 × 13.97445784  ÷ 0.07

= $1,500 × 199.635112

= $299,452.668

Therefore for computing the future value of annuity we applied the above formula.

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