Question

17. Eduardo is a 40-year-old individual who plans to retire at age 65. Between now and then, $2000 is paid annually into his IRA account, which is anticipated to pay 5% compounded annually. How much will be in the account upon Eduardo's retirement?

Answer 1

FV= $95,454.20

Explanation:

Giving the following information:

Annual deposit= $2,000

Number of periods= 25 years

Interest rate= 5% compounded annually

To calculate the future value of the annual deposits, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {2,000*[(1.05^25) - 1]} / 0.05

FV= $95,454.20