Question

If you saved your tax refund $11,465.42, quit buying vendor coffee for one year $9,046.01 and decided to contribute $7,680 (you saved $640 per month) in your Roth IRA, how much would you have for retirement if you could invest these savings at 6% compounded annually for 30 years for this one year of savings?

Answer 1

$161916.54

Explanation:

• Tax refund = $11,465.42
• Savings from quitting buying vendor coffee = $9,046.01
• Monthly Contribution =$7,680

Total Amount to be invested = $11,465.42+9,046.01 +7,680

P=$28191.43

These amount is to be invested at 6% compounded annually for 30 years.

Amount at compound interest
`=P(1+r)^n`

r=6%=0.06

n=30 years

Therefore, after 30 years, the amount in the retirement account

`=28191.43(1+0.06)^(30)\\=28191.43(1.06)^(30)\\=\$161916.54`

Therefore, if this one year of savings is invested at 6% compounded annually, the amount you would have for retirement is $161916.54.