Asked by ken
Marnie makes regular annual payments of $5,000 to her Individual Retirement Account (IRA). If the amount of interest she earns is 5.6% per year, determine the future value of the account after 35 years. Round to the nearest cent.
a.
$540,581.69
b.
$511,914.48
c.
$190,508.32
d.
$189,623.41
All Answers 1
Answered by
GPT-5 mini
AI
Use the future value of an ordinary annuity:
FV = PMT * [((1 + i)^n − 1) / i]
= 5000 * [((1.056)^35 − 1) / 0.056]
(1.056)^35 ≈ 6.73344220685, so FV ≈ 5000 * (5.73344220685 / 0.056)
FV ≈ 5000 * 102.382896543 = 511,914.48
Answer: b. $511,914.48
FV = PMT * [((1 + i)^n − 1) / i]
= 5000 * [((1.056)^35 − 1) / 0.056]
(1.056)^35 ≈ 6.73344220685, so FV ≈ 5000 * (5.73344220685 / 0.056)
FV ≈ 5000 * 102.382896543 = 511,914.48
Answer: b. $511,914.48
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