Question

If the maximum payment of $5,000 is made into a Individual Retirement Account (IRA) for 25 years at an annual interest rate of 3.2%, determine the amount in the account.Round to the nearest cent.If the maximum payment of $5,000 is made into a Individual Retirement Account (IRA) for 25 years at an annual interest rate of 3.2%, determine the amount in the account.Round to the nearest cent.

a.

$187,159.62


b.

$193,148.73


c.

$129,082.99


d.

$129,427.21

Answer 1

A) $187,159.62 with no inflation

Answer 2

s=$187,159.62

Explanation:

Account (IRA) for 25 years at an annual interest rate of 3.2%, determine the amount in the account.Round to the nearest cent.If the maximum payment of $5,000 is made into a Individual Retirement Account (IRA) for 25 years at an annual interest rate of 3.2%, determine the amount in the account.Round to the nearest cent

Future Value of an Ordinary Annuity

`s=R((1+i)^(n) -1))/i`

where

S is the future value;

R is the periodic payment;

i is the interest rate per period;

n is the number of periods.

s=5000(1+0.032)^25-1)/0.032

s=$187,159.62