Worker A annually invests $1,000 in an IRA pension account for ten years (ages 26 through 35) and never makes another contribution. Worker B annually invests $1,200 in an IRA account for thirty years (ages 36 through 65). Which worker will have more in his or her account when he or she retires (at the age of 65) if they both earn 8 percent on their investments? Provide detailed calculation.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Worker A annually invests $1,000 in an IRA pension account for ten years (ages 26 through 35) and never makes another contribution. Worker B annually invests $1,200 in an IRA account for thirty years (ages 36 through 65). Which worker will have more in his or her account when he or she retires (at the age of 65) if they both earn 8 percent on their investments? Provide detailed calculation.

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The FV of an investment refers to the worth of the cash flows of the investment at a future date assuming it grows at a fixed rate. It is used by investors to determine the value of their holdings.

 

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