At age 25, to save for retirement. Rebecca decides to deposit $100 at the end of

Question

At age 25, to save for retirement. Rebecca decides to deposit $100 at the end of each month in an IRA that pays 6 5% compounded monthly. Use the formula for the value of an annuity. How much will she have from the IRA when she retires at age 65? Find the interest How much money will be in the IRA when Rebecca retires? (Do not round until the final answer Then round to the nearest dollar as needed.) How much interest will the IRA have gained? (Do not round until the final answer. Then round to the nearest dollar as needed.)

Explanation / Answer

a)

P=100,r=6.5%=0.65,t=65-25=40,n=12

A=100[(1+(0.65/12))12*40-1]/(0.65/12)

A=183114203490311 dollars

money in IRA when rebecca retires =183114203490311 dollars

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b)interest gained =183114203490311-(100*40*12)

interest gained =183114203442311 dollars

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