Mathematics: You set up an ira (individual retirement account) with an apr of 5% at age 25. at the end of each month, you deposit $75 in the account. how much will the ira contain when you retire at the age of 65? a. $114,451.51 c. $114,135.20 b. $115,625.02 d. $115,230.06

Put a shaded dot in 9 and an arrow pointing leftStep-by-step explanation:...

You set up an ira (individual retirement account)

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902coo

20.06.2020

Mathematics

Option a) $114,451.51

Step-by-step explanation:

We are given that you set up an IRA (Individual retirement account) with an APR of 5% at age 25. At the end of each month, you deposit $75 in the account

we need to find the amount of money IRA contain when you retire at the age of 65

Here we need to find the total savings , so we need to apply the formula for future value of annuity

It says :

$FV= P\frac{[(1+\frac{r}{n})^{nt}-1)]}{\frac{r}{n}}$

Here, FV = Future value( Savings)

P = $75 (Monthly deposit)

r = 5% =0.05 (APR)

n = 12 ( as we are compounding monthly)

t = 65-25 = 40 ( number of years )

So plugging in all the values in the formula , we get

$FV= 75\frac{[(1+\frac{0.05}{12})^{(12)(40)}-1)]}{\frac{0.05}{12}}$

Simplifying further, we get

$FV= 75\frac{[(1+\frac{0.05}{12})^{480}-1)]}{\frac{0.05}{12}}$

Plugging in the given values in the calculator and simplifying, we get

FV=$114,451.51

So correct option is a

Hope it was helpful !:)

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You set up an ira (individual retirement account) with an apr of 5% at age 25. at the end of each month, you deposit $75 in the account. how much will the ira contain when you retire at the age of 65? a. $114,451.51 c. $114,135.20 b. $115,625.02 d. $115,230.06

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