+0  
 
0
107
1
avatar

At age

18​,

someone sets up an IRA​ (individual retirement​ account) with an APR of

8​%.

At the end of each month he deposits

​$45

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.

 Feb 25, 2023
 #1
avatar
0

65  -  18 ==47 years

 

47  x  12 ==564 months

 

P=45;   R=0.08/12;  N=47*12;    FV=P*((1 + R)^N - 1)/ R

 

FV = $279,556.98 - balance in his IRA account by age 65.

 

Total deposits made ==564  x  $45 ==$25,380

 

$279,556.98  -  $25,380 ==$254,176.98 - interest earned on his IRA over the period of 47 years.

 

Note: I took the interest rate of 8% as being compounded monthly.

 Feb 26, 2023

3 Online Users

avatar
avatar