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

Question

Quizplus · Accepted Answer

Using the formula for the future value of an annuity, we can calculate:

FV = PMT * [(1 + r)^n - 1] / r

where FV is the future value, PMT is the annual deposit, r is the annual interest rate, and n is the number of deposits.

Plugging in the values given:

FV = $2,000 * [(1 + 0.08)^20 - 1] / 0.08 
FV ≈ $98,846

Therefore, the amount in the account 20 years from today will be approximately $98,846. Choice C is the correct answer.

James Plans to Fund His Individual Retirement Account,beginning Today,with 20