Question

You have just made your first $4,500 contribution to your individual retirement account. Assume you earn an annual return of 11.45 percent and make no additional contributions.

a. What will your account be worth when you retire in 43 years?
b. What if you wait 10 years before contributing?

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Investment= $4,500

Interest rate= 11.45%

For both options, we will use the following formula:

FV= PV*(1+i)^n

a. Number of years= 43

FV= 4,500*(1.1145^43)

FV= $476,053.37

b. Number of years= 33

FV= 4,500*(1.1145^33)

FV= $161,010.77