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You have just made your first $4,000 contribution to your individual retirement account. Assume you earn an annual return of 10.6 percent and make no additional contributions. a. What will your account be worth when you retire in 43 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What if you wait 10 years before contributing? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Respuesta :

anwar96iqbal

Answer:

a. $304,460.15

b. $111,167.84

Explanation:

The formula for Future Value is

              Future Value = Present Value ( 1 + rate ) ^ no. of periods

a) Future Value = 4,000 (1.106) ^ 43 = $304,460.15

b) What if we wait for 10 years ? It means that what if we invest for 33 years. So, all we have to do is to change the number of periods in the formula and it will give us $111,167.84.

These concepts are related to Time Value of Money. Do contact me if you need guidance in this regard.

Thanks.

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