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At age25 ​, someone sets up an IRA​ (individual retirement​ account) with an APR of 7​%. At the end of each month he deposits

​$75 in the account. How much will the IRA contain when he retires at age​ 65? Compare that amount to the total deposits made over the time period.

 

After retirement the IRA will contain ​$

.

Guest Oct 18, 2017
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This is the formula you would use to find the FV of the IRA at 65.

 

FV=P{[1 + R]^N - 1/ R}

FV =$75 x {[1 + 0.07/12]^(40*12) - 1 / (0.07/12)}

FV =$196,861.00 - This is what the balance in the IRA should be after 40 years.

Total deposits should be =$75 x 40 years x 12 months =$36,000

$196,861 - $36,000 =$160,861 was interest earned over 40-year period.

P.S. Do the math in the above formula and you should get the same answer that I got!!.

Guest Oct 19, 2017
edited by Guest  Oct 19, 2017
edited by Guest  Oct 19, 2017

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