Explanation Given: The payment for every three month is $500. The account earns 12% interest compounded quarterly. Number of years he decides to pay is 30. Formula used: Amount of an Annuity: The amount of annuity after n payment periods is A = P ⋅ ( 1 + i ) n − 1 i , where P denotes the payment in dollars made at each payment for an annuity at i percent interest per payment period. Calculation: The payment for every three month is P = $500. Since he needs to contribute the payment in each quarter, the number of payments will be n = 30 × 4 = 120 . Since the account earns 8% interest compounded quarterly, the interest per payment period is i = 0.08 4 = 0.02 . Substitute P = $ 500 , n = 120 and i = 0

3rd Edition

ISBN: 9780321880116

Author: Michael Sullivan III, Katherine R. Struve, Janet Mazzarella

Publisher: PEARSON

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Chapter 13.3, Problem 18E

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The value of the IRA after 30 years if his account earns 8% interest compounded quarterly.

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Ch. 13.1 - A(n) _____ is a function whose domain is the set...Ch. 13.1 - Prob. 2E Ch. 13.1 - Prob. 3E Ch. 13.1 - Prob. 4E Ch. 13.1 - Prob. 5E Ch. 13.1 - Prob. 6E Ch. 13.1 - Prob. 7E Ch. 13.1 - Prob. 8E Ch. 13.1 - Prob. 9E Ch. 13.1 - Prob. 10E

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The value of the IRA after 30 years if his account earns 8% interest compounded quarterly.

Solution Summary: The author calculates the value of the IRA after 30 years if the account earns 8% interest compounded quarterly.

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The value of the IRA after 30 years if his account earns 8% interest compounded quarterly.

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