Solve the problem.
-To save for retirement, Sue decides to deposit $1750 into an IRA at the end of each year for the next 40 years. If the interest rate is 7% per year compounded annually, find the value of the IRA after 40 years. (Round to the
Nearest dollar.)
A) $349,361
B) $24,455
C) $5,388,611
D) $324,871

Question

Quizplus · Accepted Answer

The value of the IRA after 40 years can be calculated using the formula for the future value of an annuity: $FV = P \times \frac{(1 + r)^n - 1}{r}$, where P is the annual payment ($1750), r is the annual interest rate (7% or 0.07), and n is the number of payments (40). Plugging in the values: $FV = 1750 \times \frac{(1 + 0.07)^{40} - 1}{0.07}$, which rounds to approximately $349,361.

Solve the Problem. -To Save for Retirement, Sue Decides to Deposit $1750 into Deposit