Sam retirement savings account pays 7% annual interest compound monthly. He invests $15,000 in the account when he is 25 years old. How much will he have for retirement when he is 65?

Answer:he will have $244665 in his account when he retires.

Step-by-step explanation:

He invests $15,000 in the account when he is 25 years old. This means that the principal

P = 15000

It was compounded monthly. This means that it was compounded 12 times in a year. So

n = 12

The rate at which the principal was compounded is 7%. So

r = 7/100 = 0.07

He left the money till he retired at the age of 65. So

t = 65 - 25 = 40 years

The formula for compound interest is

A = P (1+r/n) ^nt

A = total amount in the account at the end of t years. Therefore

A = 15000 (1+0.07/12) ^12*40

A = 15000 * 16.311

A = $244665