How much will you have in a Roth IRA if you invest $5,000 a year for 35 years if money earns 5% and you make the investment at the beginning of each year?
A)$474,181.61
B)$590,604.33
C)$557,173.89
D)$451,601.54

Question

Quizplus · Accepted Answer

The correct answer is A because the future value of an annuity is calculated as follows:FV = P * [(1 + r)^n - 1] / rwhere:P is the annual paymentr is the annual interest raten is the number of yearsIn this case, P = $5,000, r = 5%, and n = 35. Plugging these values into the formula, we get:FV = $5,000 * [(1 + 0.05)^35 - 1] / 0.05= $5,000 * [3.4399 - 1] / 0.05= $5,000 * 2.4399 / 0.05= $474,181.61

How Much Will You Have in a Roth IRA If