Chapter 7.1, Problem 71E

Future value. At the end of each year, $5,000 is invested into an IRA earning 3% compounded annually.

1. (A) How much will be in the account at the end of 30 years? Use the annuity formula

     $F\left(P,i,n\right)=P\frac{{\left(1+i\right)}^n-1}{i}$

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.