Question

Rosalia White will invest $3,000 in an IRA for the next 30 years starting at the end of this year. The investment will earn 13 percent annually. How much will she have at the end of 30 years

Answer 1

$879,597.65

Step-by-step explanation:

The future value of an ordinary annuity formula is applicable in this case, since an ordinary annuity is such that payments into the accounts are expected to occur at the end of the periods rather than at the beginning of each year:

FV=yearly payment*(1+r)^n-1/r

yearly payment=$3,000

r=13%

n=number of annual payments =30

FV=$3000*(1+13%)^30-1/13%

FV=$3000*(1.13)^30-1/0.13

FV=$3000*(39.11589796-1)/0.13

FV=$3000*38.11589796/0.13

FV=$879,597.65