Concept explainers
Future value. At the end of each year, $5,000 is invested into an IRA earning 3% compounded annually.
- (A) How much will be in the account at the end of 30 years? Use the annuity formula
where
P = periodic payment
i = rate per period
n = number of payments (periods)
F = FV = future value
(B) Use graphical approximation methods to determine the rate of interest that would produce $300,000 in the account at the end of 30 years.
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