James plans to fund his individual retirement account, beginning today, with 20 annual deposits of $2,000, which he will continue for the next 20 years. If he can earn an annual compound rate of 8 percent on his deposits, the amount in the account upon retirement will be ________.

Question

Quizplus · Accepted Answer

Using the formula for future value of an annuity, we have:
FV = PMT [(1 + r)^n - 1] / r
FV = $2,000 [(1 + 0.08)^20 - 1] / 0.08
FV = $98,846.25

James Plans to Fund His Individual Retirement Account, Beginning Today