Question
In: Finance
If you deposit $2,000 at the end of each year into an IRA account that is...
If you deposit $2,000 at the end of each year into an IRA account that is expected to earn 8% per year simple interest, how much will be in the account in 30 years? (Answer to the nearest dollar)
Solutions
Expert Solution
| Calculation of balance in IRA account after 30 years | ||||||
| Year | Annuity | Deposit amount | Interest @ 8% simple interest | Cumulative Interest | ||
| 1 | $2,000.00 | $2,000.00 | $0.00 | $0.00 | ||
| 2 | $2,000.00 | $4,000.00 | $160.00 | $160.00 | ||
| 3 | $2,000.00 | $6,000.00 | $320.00 | $480.00 | ||
| 4 | $2,000.00 | $8,000.00 | $480.00 | $960.00 | ||
| 5 | $2,000.00 | $10,000.00 | $640.00 | $1,600.00 | ||
| 6 | $2,000.00 | $12,000.00 | $800.00 | $2,400.00 | ||
| 7 | $2,000.00 | $14,000.00 | $960.00 | $3,360.00 | ||
| 8 | $2,000.00 | $16,000.00 | $1,120.00 | $4,480.00 | ||
| 9 | $2,000.00 | $18,000.00 | $1,280.00 | $5,760.00 | ||
| 10 | $2,000.00 | $20,000.00 | $1,440.00 | $7,200.00 | ||
| 11 | $2,000.00 | $22,000.00 | $1,600.00 | $8,800.00 | ||
| 12 | $2,000.00 | $24,000.00 | $1,760.00 | $10,560.00 | ||
| 13 | $2,000.00 | $26,000.00 | $1,920.00 | $12,480.00 | ||
| 14 | $2,000.00 | $28,000.00 | $2,080.00 | $14,560.00 | ||
| 15 | $2,000.00 | $30,000.00 | $2,240.00 | $16,800.00 | ||
| 16 | $2,000.00 | $32,000.00 | $2,400.00 | $19,200.00 | ||
| 17 | $2,000.00 | $34,000.00 | $2,560.00 | $21,760.00 | ||
| 18 | $2,000.00 | $36,000.00 | $2,720.00 | $24,480.00 | ||
| 19 | $2,000.00 | $38,000.00 | $2,880.00 | $27,360.00 | ||
| 20 | $2,000.00 | $40,000.00 | $3,040.00 | $30,400.00 | ||
| 21 | $2,000.00 | $42,000.00 | $3,200.00 | $33,600.00 | ||
| 22 | $2,000.00 | $44,000.00 | $3,360.00 | $36,960.00 | ||
| 23 | $2,000.00 | $46,000.00 | $3,520.00 | $40,480.00 | ||
| 24 | $2,000.00 | $48,000.00 | $3,680.00 | $44,160.00 | ||
| 25 | $2,000.00 | $50,000.00 | $3,840.00 | $48,000.00 | ||
| 26 | $2,000.00 | $52,000.00 | $4,000.00 | $52,000.00 | ||
| 27 | $2,000.00 | $54,000.00 | $4,160.00 | $56,160.00 | ||
| 28 | $2,000.00 | $56,000.00 | $4,320.00 | $60,480.00 | ||
| 29 | $2,000.00 | $58,000.00 | $4,480.00 | $64,960.00 | ||
| 30 | $2,000.00 | $60,000.00 | $4,640.00 | $69,600.00 | ||
| IRA balance after 30 years = Cumulative Deposit value + Cumulative interest value | ||||||
| IRA balance after 30 years = $60000 + $69600 = $1,29,600 | ||||||
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type of annuity:
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