Question

Chuck Russo, a high school math teacher, wants to set up an IRA account into which he will deposit $2,000 per year. He plans to teach for 20 more years and then retire. If the interest on his account is 7% compounded annually, how much will be in his account when he retires?

Answer 1

Answer:

FV= $819,909.85

Explanation:

Giving the following information:

Anual deposit= $20,000

Number of periods= 20 years

Interest rate= 7%

To calculate the future value, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {20,000*[(1.07^20) - 1]} / 0.07

FV= $819,909.85