Question

You are graduating from college at the end of this semester and have decided to invest ​$4 comma 500 at the end of each year into a Roth IRA​ (a retirement investment account that grows tax free and is not taxed when it is​ liquidated) for the next 30 years. If you earn 6 percent compounded annually on your investment of ​$4 comma 500 at the end of each​ year, how much will you have when you retire in 30 ​years? How much will you have if you wait 10 years before beginning to save and only make 20 payments into your retirement​ account?

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

You decided to invest ​$4,500 at the end of each year earning 6 percent compounded annually.

We need to use the following formula to calculate the final value of the investment:

FV= PV*(1+i)^n

A) n= 30 years

FV= 4,500*(1+0.06)^30= $25,845.71

B) The investment is made for 20 years.

FV= 4,500*1.06^20= $14,432.11