Amy will deposit $5,000 a year into an IRA for the next 30 years. How much will Amy have if the IRA earns 7%?

Question

Amy will deposit $5,000 a year into an IRA for the next 30 years.  How much will Amy have if the IRA earns 7%? ​

Quizplus · Accepted Answer

This requires calculating the future value of an annuity. Using the formula:

FV = PMT x ((1 + r)^n - 1) / r

where PMT is the annual deposit, r is the interest rate, and n is the number of years. Plugging in the values, we get:

FV = 5000 x ((1 + 0.07)^30 - 1) / 0.07

FV = $472,304

Therefore, choice B is the correct answer.

Amy Will Deposit $5,000 a Year into an IRA for the Next