Billy Bob has decided to put $2,400 a year (at the end of each year) into an IRA over his 40-year working life and then retire. What will Billy have if the account will earn 10 percent compounded annually?
A) $394,786
B) $23,470
C) $1,062,223
D) $810,917

Question

Quizplus · Accepted Answer

We can solve this using the formula for future value of an annuity: FV = C * [(1 + r)^n - 1]/r, where C is the annual contribution, r is the interest rate, and n is the number of years. Plugging in the numbers, we get: FV = 2,400 * [(1 + 0.1)^40 - 1]/0.1 = $1,062,223. Therefore, the correct answer is C.

Billy Bob Has Decided to Put $2,400 a Year (At