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.

Guest Feb 25, 2023

#1**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.**

Guest Feb 26, 2023