Solve the problem. Round to the nearest cent.
-Joe wants to start an SEP-IRA that will have $460,000 in it when he retires in 15 years. How much should he invest semiannually in his IRA to do this if the interest is 15% compounded semiannually?
A) $44.35.77
B) $17,612.13
C) $4790.74
D) $4448.77

Question

Quizplus · Accepted Answer

The correct answer is D.To solve this problem, we can use the formula for the future value of an annuity:FV = P * ((1 + r/n)^(n*t) - 1) / (r/n)where:FV is the future value of the annuityP is the amount of each paymentr is the annual interest raten is the number of times per year that the interest is compoundedt is the number of yearsIn this case, we have:FV = $460,000r = 15% = 0.15n = 2 (since the interest is compounded semiannually)t = 15Substituting these values into the formula, we get:$460,000 = P * ((1 + 0.15/2)^(2*15) - 1) / (0.15/2)$460,000 = P * 100.07P = $4,599.26Therefore, Joe should invest $4,599.26 semiannually in his IRA to reach his goal of $460,000 in 15 years.

Solve the Problem. Round to the Nearest Cent