Question

Suppose Amanda wants to have $800,000 in her IRA at the end of 30 years. She chooses to invest in an annuity that pays

Answer 1

Her IRA interest at the end of 30 years is mathematically given as

Interest= 438,765.56

IRA interest

Question Parameters:

• N = 30
• PV = 0
• rate = 5%
• FV = 800,000

Generally the equation for the payment function on excel is mathematically given as

A=PMT(rate, nper, pv, [fv], [type])

Therefore, inputting our functions

A=PMT(rate, nper, pv, [fv], [type])

where

A=PMT(5%, 30, 0, [800000], [])

A = 12,041.1481

Hence

interest = 800,000 - 30*12,041.1481

Interest= 438,765.56

For more information on Growth rate

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