Question

At age 25, to save for retirement, you decide to deposit $75 at the end of each month in an ira that pays 6.5% compounded monthly. how much will you have from the ira when you retire at age 65? find the interest.

Answer 1

Let P= $75, r=0.0054166, n= 40. In the future worth formula, F= P((1+r)^(n-1) -1) / r, it would yield a future worth of 3,247.16 at the age of 65. And the interest rate is I= (r^n-10)/(r-1). It yields an interest of 1.033