Question

If you set aside $9000 at the end of each year for the next 22 years in a Roth IRA, how much will you have at your retirement 22 years from today if your IRA earns 7.8% annual percentage rate (APR) with quarterly compounding?

Answer 1

$501,049.37

Explanation:

For computing the amount after 22 years we need to applied the future value which is shown in the attachment below:

Given that

PMT = $9,000

NPER = 22 years

Annual rate = 0.078

Quarterly= 0.078 ÷ 4 = 0.0195

Effective annual rate = (1.0195^4) - 1 = 0.0803113041

Now applied the formula which is given below

= -FV(RATE;NPER;PMT;PV)

After applying the above formula, the future value is $501,049.37