Question

Daniel deposits $2,000 per year at the end of the year for the next 15 years into an IRA account that currently pays 7%. How much will Daniel have on deposit at the end of the 15 years

Answer 1

Answer:

$50,258.

Explanation:  

According to the scenario, computation of the given data are as follow:-

We can calculate the deposit amount at the end of 15 years by using following formula:-

Deposit Amount per year(PMT) = $2,000

Interest rate = 7% = 0.07

Deposit year (n) = 15 years

Future value(FVIFA) = PMT × [{(1 + interest rate)^number of years - 1} ÷ interest rate]

= $2,000 × [{(1 + 0.07)^15 - 1} ÷ 0.07]

= $2,000 × [{2.7590315 - 1} ÷ 0.07]

= $2,000 × [1.7590315/0.07]

= $2,000 × 25.129022

= $50,258

According to the analysis total deposit at the end of the year is $50,258.