Question

1. Ira Schwab opens up a Schwab IRA and places $2,000 in his retirement account at the beginning of each year for 10 years. He believes the account will earn 5 percent interest per year, compounded quarterly. How much will he have in his retirement account in 10 years?

Answer 1

He will have $102,979 in his retirement account in 10 years.

Step-by-step explanation:

Annual Payment = $2,000

Number of Year = n = 10

Interest rate = i = 5%

Compounded Quarterly

Future value after 10 years

FV = A [ ( ( 1 + ( r / m )^mt ) - 1 / ( r / m )

FV = $2,000 [ ( ( 1 + ( 0.05 / 4 )^40 ) - 1 / ( 0.05 / 4 )

Future value = $102,979

So, Ira Schwab will have $102,979 in his retirement account in 10 years.