Mary, age 27, annually invests $1,000 in an IRA starting this year through the year of her 35th birthday, and then never makes another contribution. Sara, age 36, annually invests $1,000 in an IRA through the year of her 65th birthday. If both Mary and Sara can earn 8% on their investments, who will have more in her IRA account when she retires at the end of her 65th year AND approximately how much more will she have in her account?
For Mary,
Calculating Value at the end of Year 36,
Using TVM Calculation,
FV = [PV = 0, PMT = 1,000, N = 8, I = 0.08]
FV = $10,636.63
Value at the end of Year 65 = 10,636.63(1.08)30
Value at the end of Year 65 = $107,032.76
For Sara,
Calculating Value at the end of Year 65,
using TVM Calcaulation,
FV = [PV = 0, PMT = 1,000, N = 30, I = 0.08]
FV = 113,283.21
Difference in Amount = 113,283.21 - 107,032.76
Difference in Amount = $6,250.45
Mary, age 27, annually invests $1,000 in an IRA starting this year through the year of...
Worker A annually invests $1,000 in an IRA for nine years (ages 27 through 35) and never makes another contribution. Worker B annually invests $1,000 in an IRA for thirty years (ages 36 through 65). Which worker will have more in his or her account when he or she retires if they both earn 8 percent on their investments?
You annually invest $1,000 in an individual retirement account (IRA) starting at the age of 20 and make the contributions for 15 years. Your twin sister does the same starting at age 35 and makes the contributions for 25 years. Both of you earn 7 percent annually on your investment. What amounts will you and your sister have at age 60? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar. Amount on...
on her 20th birthday, suizie invests $10,000 in an IRA(individual retirement account the earns 8 percent per year. She continues to invest %5,500 on each birthday for the next 48 years. how much money will she have at age 48?
1. Meagan invests $1,200 each year in an IRA for 12 years in an account that earned 5% compounded annually. At the end of 12 years, she stopped making payments to the account, but continued to invest her accumulated amount at 5% compounded annually for the next 11 years. a. [3 pts] What was the value of the IRA at the end of 12 years? b. [2 pt] What was the value of the investment at the end of the...
Mary wants to withdarw $100,000 a year for 20 years from herIRA account. She expects to retire with $1,000,000 in her IRAaccount. About what interest rate must she earn on the IRAaccount?
Mary's 25th birthday is today, and she hopes to retire on her 65th birthday. She has determined that she will need to have $3,000,000 in her retirement savings account in order to live comfortably. Mary currently has no retirement savings, and her investments will earn 5% annually. How much must she deposit into her account at the end of each of the next 40 years to meet her retirement savings goal? Your Answer:
Bob and Sue are twins. Bob invests $10,000 at 8% at age 25. Sue invests $10,000 at 8% at age 30. Both of their investments compound annually, neither Bob nor Sue withdraw any of their principal or interest before retirement, and both of them retire at age 70. Which of the following statements is correct? Sue will earn more compound interest than Bob. Bob will have less money when he retires than Sue. Sue will earn more interest on interest...
Scott and Todd are twins. Scott invests $50 a month for ten years starting on his 20th birthday. Todd invests $50 a month for ten years starting on his 25th birthday. Both Scott and Todd earn 7 percent. Which one of the following statements is correct based on this information? Assume they never withdraw any money from their accounts. A.Both Scott and Todd will have the same amount saved when they turn 60 if the 7 percent is simple interest....
An individual is considering contributing $4,500 per year to either a traditional or a Roth IRA. Payments would begin in one year. If she uses the traditional IRA, her contributions would be fully deductible. She is 41-years old and is in a 29 percent tax bracket. On either IRA she can earn 8 percent. When she retires at age 65, she believes she will be in a 18 percent tax bracket. Which type of IRA should she choose if she...
1. Meagan invests $1,200 each year in an IRA for 12 years in an account that earned 5% compounded annually. At the end of 12 years, she stopped making payments to the account, but continued to invest her accumulated amount at 5% compounded annually for the next 11 years. a. [3 pts] What was the value of the IRA at the end of 12 years? Formula 1 Work* 1.5 I Answef 0.5 b. [2 pts] What was the value of...