You put $5,000 per year in an IRA earning 10% a year starting when you graduate and stop 15 years later.How much will you have for retirement,30 years after you stop depositing,if the account continues to earns 10% a year?

Question

Quizplus · Accepted Answer

The first step is to calculate the balance after 15 years of contributions:

$5,000 * [(1 + 0.1)^15 - 1] / 0.1 = $146,621.01

This formula calculates the accumulated balance of these annual deposits over 15 years, taking into account the interest earned. Now, we need to know how much this balance will grow over the next 30 years, assuming the same rate of return of 10%.

$146,621.01 * (1 + 0.1)^30 = $2,772,053.70

Therefore, the answer is C.

You Put $5,000 Per Year in an IRA Earning 10