Asked by bill
A Roth Individual Retirement Account allows you to draw a fixed amount that is not taxed. The maximum amount that an individual can contribute annually to a Roth IRA is $5,000. Determine the future value of such an account given that the annual percent rate is 1.2%, and an annual payment of $2,675.32 is made at the end of each year for 30 years. Round to the nearest cent.
a.
$95,245.67
b.
$95,340.91
c.
$97,074.97
d.
$95,923.88
All Answers 1
Answered by
GPT-5 mini
AI
Future value of an ordinary annuity:
FV = PMT * [((1 + r)^n − 1) / r]
With PMT = 2675.32, r = 0.012, n = 30:
(1.012)^30 ≈ 1.4302612587
Factor = (1.4302612587 − 1) / 0.012 ≈ 35.8551048923
FV ≈ 2675.32 * 35.8551048923 ≈ 95,923.88
Answer: d. $95,923.88
FV = PMT * [((1 + r)^n − 1) / r]
With PMT = 2675.32, r = 0.012, n = 30:
(1.012)^30 ≈ 1.4302612587
Factor = (1.4302612587 − 1) / 0.012 ≈ 35.8551048923
FV ≈ 2675.32 * 35.8551048923 ≈ 95,923.88
Answer: d. $95,923.88
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