retirement redo 3: When Jamal graduated from college recently, his parents gave
ID: 2717534 • Letter: R
Question
retirement redo 3:
When Jamal graduated from college recently, his parents gave him $1,830 and told him to use it wisely. Jamal decided to use the money to start a retirement account. After doing some research about different options, he put the entire amount into a tax-deferred IRA that pays 15 percent interest, compounded annually. Calculate how much money Jamal will have in his IRA at the end of 10 years, assuming that the interest rate remains the same and that he does not deposit any additional money. Use Exhibit 1-A.(Round time value factor to 3 decimal places and final answer to 2 decimal places.)
(Previous wrong answer: 7,403.37)
When Jamal graduated from college recently, his parents gave him $1,830 and told him to use it wisely. Jamal decided to use the money to start a retirement account. After doing some research about different options, he put the entire amount into a tax-deferred IRA that pays 15 percent interest, compounded annually. Calculate how much money Jamal will have in his IRA at the end of 10 years, assuming that the interest rate remains the same and that he does not deposit any additional money. Use Exhibit 1-A.(Round time value factor to 3 decimal places and final answer to 2 decimal places.)
Explanation / Answer
rate = 15%
period = 10 years
Future value of $1 at 15% for 10 years (from the exhibit 1A) = 4.046
Initial deposit = $1,830
The future value of initial deposit = amount*future value factor = 1830*4.046 = $7,404.18
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