Question

2. Earl Broker is 25 years old, senior in college and he decides to put $150 every year in a Roth IRA through Vanguard Total

Answer 1

Answer: a) $66,388.86

the total sum Earl will receive when he withdraws the money in his  65th birthday is $66,388.86

Explanation:

Given that;

Annuity = $150

r = 10%

Earl is 25years now

Earl plans to withdraw the money when he is 65

which mean Period N = ( 65 - 25 ) = 40

To find the future value, we use use the express

Future value = annuity × (((1+r)^n)-1)/r)

we substitute our values

Future Value = 150 × (((1 + 10/100)^40)-1)/10/100)

= 150 × (((1.10)^40)-1) / 0.01)

150 × ((45.2592 - 1)/0.1)

150 × 442.5924

Future Value = $66,388.86

therefore the total sum Earl will receive when he withdraws the money in his  65th birthday is $66,388.86