Hal Thomas, a 25-year-old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2,000 each a year into a tax-deferred individual retirement arrangement (IRA). The IRA will earn a 10% return over the next 40 years. a. If Hal makes annual end-of-year $2,000 deposits into the IRA, how much will he have accumulated by the end of his sixty-fifth year? b. If Hal decides to wait until age 35 to begin making annual end-of-year $2,000 deposits into the IRA, how much will he have accumulated by the end of his sixty-fifth year?
Hal Thomas, a 25-year-old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2,000 each a year into a tax-deferred individual retirement arrangement (IRA). The IRA will earn a 10% return over the next 40 years. a. If Hal makes annual end-of-year $2,000 deposits into the IRA, how much will he have accumulated by the end of his sixty-fifth year? b. If Hal decides to wait until age 35 to begin making annual end-of-year $2,000 deposits into the IRA, how much will he have accumulated by the end of his sixty-fifth year?
Chapter4: Income Tax Withholding
Section: Chapter Questions
Problem 7QR
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Financial accounting question
Transcribed Image Text:Hal Thomas, a 25-year-old college graduate, wishes to retire at
age 65. To supplement other sources of retirement income, he
can deposit $2,000 each a year into a tax-deferred individual
retirement arrangement (IRA). The IRA will earn a 10% return
over the next 40 years.
a. If Hal makes annual end-of-year $2,000 deposits into the IRA,
how much will he have accumulated by the end of his sixty-fifth
year?
b. If Hal decides to wait until age 35 to begin making annual
end-of-year $2,000 deposits into the IRA, how much will he have
accumulated by the end of his sixty-fifth year?
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