res Respondus LockDown Browser me Left 1.09:37Tahzae Johnson: Attempt 1 Page 17

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res Respondus LockDown Browser me Left 1.09:37Tahzae Johnson: Attempt 1 Page 17 of 2 Previous Page Next Page Note: It is necommended that you save your response as you complete each question Question 17 (10 points) d You have just made your frst $6,000 contribution to your individual setirement account. Assuming you carn an annual rate of seturn of 10 percent and make no additional contributions, what wall your account be worth when you retire in 40 years $294,165.23 $311,558.93 $271,555.53 Prevlous Page Next Pape Page 17 of 20 Save All Responses Ge to Submit Qui

Explanation / Answer

Given:

Present Value (PV)= $6,000

Interest rate (r )= 10%

Time period (t)= 40 years

The formula for computing future value:

FV=PV (1+r)^t

     =$6,000(1+0.10)^40= $271,555.53

This can also be calculated using a financial calculator by inputting the below:

PV= $6,000; N= 40 years; I/Y= 10%

Press the CPT and FV button to get the future value.

Therefore, the answer is Option 3.

I hope that was helpful :)

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