Question

An Individual Retirement Account​ (IRA) has ​$21,000 in​ it, and the owner decides not to add any more money to the account other than interest earned at 8​% compounded daily. How much will be in the account 26 years from now when the owner reaches retirement​ age?

Answer 1

There will be approx $167,771.73 in the account.

Explanation:

p = $21000

r = 8% or 0.08

n = 365 (assuming 365 days a year)

t = 26

A = ?

Compound interest formula is:

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

Substituting values in formula, we get;

`A=21000(1+(0.08)/(365)^(365*26) )`

`A=21000(1.000219)^(9490) }`

A = $167771.73 approx

Hence, there will be approx $167,771.73 in the account.