Question

Joe plans to fund his individual retirement account (IRA) with the maximum contribution of $2,500 at the end of each year for the next 30 years. If Joe can earn 10 percent on his contributions, how much will he have at the end of the thirtieth year?
a. $411,235
b. $611,235.
c. $23,567.
d. $43,567.

Answer 1

Answer:

FV= $411,235.06

Explanation:

Giving the following information:

Annual deposit= $2,500

Number of periods= 30 years

Interest rate= 10%

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

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

A= annual deposit

FV= {2,500*[(1.1^30) - 1]} / 0.1

FV= $411,235.06