Problem:
John begins a retirement program by investing monthly amounts of $185 from his pay and placing it in an account guaranteed to earn 6% interest. (This means the effective monthly rate is 0.5%.) Deposits will be taken from his check at the end of each month, beginning in one month for 42 consecutive years, the time when John expects to retire.
Required:
Which of the following amounts comes closest to the balance in the account at the time of his retirement?
a. $413,000
b. $420,000
c. $436,000
d. $340,000
e. $390,000
Note: Provide support for your rationale.