If your parents put $2,000 a year into an IRA account for you in each of your last 4 teenage years (age 16,17,18, and 19), how much would the IRA account have in it at your retirement 45 years later if the account earned 12% each year? (Assume end-of-year payments.)
A)$1,567,455
B)$68,613
C)$3,457,169
D)$1,148,958

Question

Quizplus · Accepted Answer

Using the formula for the future value of a series of annuities, the future value (FV) can be calculated as FV = P * [((1 + r)^n - 1) / r], where P is the payment amount, r is the annual interest rate, and n is the number of periods. Here, P = $2,000, r = 12% or 0.12, and n = 45 years. Plugging these values into the formula gives a future value of approximately $1,567,455.

If Your Parents Put $2,000 a Year into an IRA