Answered: avid deposits $2,000 per year at the…

avid deposits $2,000 per year at the end of the year for the next 20 years into an IRA account that currently pays 6%. How much will David have on deposit at the end of 20years

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

David deposits $2,000 per year at the end of the year for the next 20 years into an IRA account that currently pays 6%. How much will David have on deposit at the end of 20years

Expert Solution

Step 1

The concept of time value of money will be used here.

As per the concept of time value of money the worth of $100 to be received today will be much more than the worth of $100 to be received at any future point in time say that to be received tomorrow or after a month or after a year.

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