Question

Please helpppppp

Anthony deposits $2,000 twice a year into his IRA account. If this account earns 6.5% compounded

semi-annually, how much will Anthony have when he retires in 35 years? How much interest will

Anthony have earned over the 35 years?

Answer 1

Given Information:

Years = t = 35

Semi-annual deposits = P = $2,000

Compounding semi-annually = n = 2

Interest rate = i = 6.5%

Required Information

Accumulated amount = A = ?

Answer:

Accumulated amount = $515,827

Explanation:

The future value of amount earned over period of 35 years and interest rate 6.5% with semi-annual deposits is given by

FV = PMT * ((1 + i/n)^nt - 1)/(i/n))

Where

n = 2

i = 0.065

t = 35

FV = 2000*((1 + 0.065/2)^2*35 - 1)/(0.065/2))

FV = 2,000*(257.91)

FV ≈ $515,827

Therefore, Anthony will have an amount of $515,827 when he retires in 35 years.