Lena has just become eligible to participate in her company's retirement plan. Her company does not match contributions, but the plan does average an annual return of 14 %. Lena is 40 and plans to work to age 65. If she contributes $200 per month, how much will she have in her plan at retirement?

Final Value = $543,139.58

Explanation:

Giving the following information:

The plan has an average annual return of 14 %. Lena is 40 and plans to work to age 65. She contributes $200 per month.

First, we need to determine the monthly interest rate:

Interest rate = 0.14/12 = 0.0117

Now, using the following formula, we can calculate the final value:

FV = {A*[ (1+i) ^n-1]}/i

A = monthly deposit = 200

i = 0.0117

n = 25*12 = 300

FV = {200*[ (1.0117^300) - 1]} / 0.0117 = $543,139.58