Matt is 25 and wants to save $2,000 per year in an IRA until he retires at age 65. If Matt's investment earns 9%, how much will his IRA be worth when he retires?
A) $64,030
B) $579,471
C) $272,620
D) $675,780

Question

Quizplus · Accepted Answer

Matt's IRA value at retirement can be calculated using the future value of an annuity formula: FV = P * [((1 + r)^n - 1) / r], where P is the annual payment ($2,000), r is the annual interest rate (9% or 0.09), and n is the number of payments (40 years). Plugging in the values: FV = $2,000 * [((1 + 0.09)^40 - 1) / 0.09] = $675,780.

Matt Is 25 and Wants to Save $2,000 Per Year