When Jamal graduated from college recently, his parents gave him $1,110 and told

Question

When Jamal graduated from college recently, his parents gave him $1,110 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 11 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. Exhibit 1 -A Future value (compounded sum) of $1 after a given number of time periods

Explanation / Answer

Calculation of money Jamal will have in his IRA at the end of 10 years:

FV = Amount invested * future value (Compounded sum) after a period of 10 years

FV = $1110 * 3.152

FV = $3498.72

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