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You are graduating from college at the end of this semester and after reading the The...

You are graduating from college at the end of this semester and after reading the The Business of Life box in this​ chapter, you have decided to invest $4,000 at the end of each year into a Roth IRA for the next 40 years. If you earn 9 percent compounded annually on your​ investment, how much will you have when you retire in 40 years. How much will you have if you wait 10 years before beginning to save and only make 30 payments into your retirement​ account?

How much will you have when you retire in 40 years? Round to the nearest cent.

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Answer #1

How much will you have when you retire in 40 years?

Future Value = Annual Investment * FV Annuity Factor (0.09,40)

Future Value = 4000 * 337.8824

Future Value at the end of 40 years = $1351529.78

How much will you have if you wait 10 years before beginning to save and only make 30 payments into your retirement​ account

Future Value = Annual Investment * FV Annuity Factor (0.09,30)

Future Value = 4000 * 136.3075

Future Value at the end of 40 years with 30 payments = $545230.15

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