Bill saves $3,000 per year in his IRA starting at age 25 and continuing to age 65,when he retires.The amount Bill has in his IRA at age 65 can be characterized as the future value of an annuity.

Question

Quizplus · Accepted Answer

This is because Bill is making regular contributions to his IRA for 40 years, which creates an annuity. The future value of that annuity can be calculated using the time value of money formula.

Bill Saves $3,000 Per Year in His IRA Starting at Age