Question

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Sondra deposits $2,600 in an IRA account on April 15, 2021. Assume the account will earn...

Sondra deposits $2,600 in an IRA account on April 15, 2021. Assume the account will earn 3% annually. If she repeats this for the next 13 years, how much will she have on deposit on April 14, 2034?

Multiple Choice

  • $46,007.

  • $50,189.

  • $41,824.

  • $43,916.

Solutions

Expert Solution

Correct answer is $41824.

See the following workings

Date Opening Amount Amount invested Total Investment Interest rate Interest amount Closing Amount
15/04/2021                     -           2,600              2,600 3% 78         2,678
15/04/2022              2,678         2,600              5,278 3% 158.34         5,436
15/04/2023              5,436         2,600              8,036 3% 241.0902         8,277
15/04/2024              8,277         2,600           10,877 3% 326.3229      11,204
15/04/2025           11,204         2,600           13,804 3% 414.1126      14,218
15/04/2026           14,218         2,600           16,818 3% 504.536      17,322
15/04/2027           17,322         2,600           19,922 3% 597.6721      20,520
15/04/2028           20,520         2,600           23,120 3% 693.6022      23,814
15/04/2029           23,814         2,600           26,414 3% 792.4103      27,206
15/04/2030           27,206         2,600           29,806 3% 894.1826      30,700
15/04/2031           30,700         2,600           33,300 3% 999.0081      34,299
15/04/2032           34,299         2,600           36,899 3% 1106.978      38,006
15/04/2033           38,006         2,600           40,606 3% 1218.188      41,824
14/04/2034           41,824

ekkarill92 answered 1 year ago
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