Question

You have $65,000 in an IRA. Your interest rate is 3.5%. If you deposit $4000 into the account each year, how much will you have in 20 years (include the initial 65,000)?

Answer 1

First we can find the future value of $65000 after 20 years then add that to future value deposits per year of $4000.

Step 1: Future value of $65,000.00

We can use the future value formula:

Where,
FV = Future value
PV = Present value
i = Rate of interest in decimal form.
n = Number of years.

Substituting the values, we get:

Step 2: Find the future value of $4000 deposited each year for 20 years.

We can use the future value of annuity formula:

FVA = Future value of deposits
A = Annuity or deposits

Step 3: Add answers of step 1 and step 2:

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If you want to do it in a single step, just add the formulas: