Question

An individual retirement account, or IRA, earns tax-deferred interest and allows the owner to invest up to $5000 each year. Joe and Jill both will make IRA deposits for 30 years (from age 35 to 65) into stock mutual funds yielding 9.1%. Joe deposits $5000 once each year, while Jill has $96.15 (which is 5000/52) withheld from her weekly paycheck and deposited automatically. How much will each have at age 65? (Round your answer to the nearest cent.) Joe $ Jill $

Answer 1

Answer:

Joe investment $5000 for 30 years every year @9.1% if he starts at the end of 35 year then at the end of 64 years he will deposit 30 installments and get maturity amount at starts of 65 years.

Hence it is a simple annuity or Regular. Using formula of annuity

Future Value =

{where a = installment , i = , n = No. of installment}

=   

=

= $

For Jill a = $96.15, i = (weekly), n =

F.V =

=

= $785482.14