You are graduating from college at the end of this semester and have decided to invest $4 comma 500 at the end of each year into a Roth IRA (a retirement investment account that grows tax free and is not taxed when it is liquidated) for the next 30 years. If you earn 6 percent compounded annually on your investment of $4 comma 500 at the end of each year, how much will you have when you retire in 30 years? How much will you have if you wait 10 years before beginning to save and only make 20 payments into your retirement account?

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Jenna Willis

Yesterday, 00:07

You are graduating from college at the end of this semester and have decided to invest $4 comma 500 at the end of each year into a Roth IRA (a retirement investment account that grows tax free and is not taxed when it is liquidated) for the next 30 years. If you earn 6 percent compounded annually on your investment of $4 comma 500 at the end of each year, how much will you have when you retire in 30 years? How much will you have if you wait 10 years before beginning to save and only make 20 payments into your retirement account?

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Tater Tot · Answer 1

Instructions are listed below.

Explanation:

Giving the following information:

You decided to invest $4,500 at the end of each year earning 6 percent compounded annually.

We need to use the following formula to calculate the final value of the investment:

FV = PV * (1+i) ^n

A) n = 30 years

FV = 4,500 * (1+0.06) ^30 = $25,845.71

B) The investment is made for 20 years.

FV = 4,500*1.06^20 = $14,432.11