Emily Rideout deposits $2,000 at the end of each of the 5 years she qualifies for an IRA. If she leaves the money that has accumulated in the IRA account for 25 additional years, how much is in her account at the end of the 30-year period? Assume an annual interest rate of 8.1%, compounded annually. Round your answer to the nearest cent.
A)$17,354.45
B)$82,399.55
C)$458,820.59
D)$293,915.51
E)$12,708.91

Question

Emily Rideout deposits $2,000 at the end of each of the 5 years she qualifies for an IRA. If she leaves the money that has accumulated in the IRA account for 25 additional years, how much is in her account at the end of the 30-year period? Assume an annual interest rate of 8.1%, compounded annually. Round your answer to the nearest cent. ​
A)$17,354.45
B)$82,399.55
C)$458,820.59
D)$293,915.51
E)$12,708.91

Quizplus · Accepted Answer

The correct answer is found by first calculating the future value of the annuity (the $2,000 annual deposit for 5 years) using the future value of an annuity formula, and then calculating the future value of this amount over the next 25 years using the future value of a single sum formula. Both calculations use the 8.1% annual interest rate.

Emily Rideout Deposits $2,000 at the End of Each of the 5