At age 40 you deposit $150 at the end of each month into an IRA that pays 4% interest compounded monthly. At age 65, what will t

Question

3 years ago

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At age 40 you deposit $150 at the end of each month into an IRA that pays 4% interest compounded monthly. At age 65, what will t

he value of the annuity be? Round your answer to the nearest cent, and do NOT include the dollar sign. Do NOT round until you have calculated the final answer.

Mathematics

1 answer:

Svetlanka [38] · Answer 1 · 2022-05-16T00:37:09+03:00

Answer:

Annuity= 242.4

Step-by-step explanation:

This is a compound interest problem.

The total amount at the end of 25 years will be

A = p(1+r/n)^(nt)

A = 150(1+(0.04/(25*12)))^ ((25*12)(25))

A= 150(1 + 0.04/300)^ (300*12)

A = 150(1+ 0.0001333)^ 3600

A = 150(1.0001333)^ 3600

A = 1500(1.615828808)

A= 242.374

A= 242.4 to the nearest cent