Solve the problem.
-To save for retirement, Sue decides to deposit $2000 into an IRA at the end of each year for the next 30 years. If the interest rate is 5% per year compounded annually, find the value of the IRA after 30 years. (Round to the
Nearest dollar.)
A)$124,645
B)$1,048,668
C)$6644
D)$132,878

Question

Quizplus · Accepted Answer

This problem involves calculating the future value of an annuity, where $2000 is deposited annually at an interest rate of 5% for 30 years. The formula for the future value of an annuity is $FV = P \times \frac{(1 + r)^n - 1}{r}$, where P is the payment amount, r is the annual interest rate, and n is the number of payments. Plugging in the values, we get $FV = 2000 \times \frac{(1 + 0.05)^{30} - 1}{0.05}$, which calculates to approximately $132,878 when rounded to the nearest dollar.

Solve the Problem. -To Save for Retirement, Sue Decides to Deposit $2000 into Deposit