Bill Clinton plans to fund his individual retirement account (IRA) with the maximum contribution of $2,000 at the end of each year for the next 20 years.If Bill he can earn 12 percent on his contributions, how much will he have at the end of the twentieth year?
A)$19,292.
B)$14,938.
C)$40,000.
D)$144,104.

Question

Quizplus · Accepted Answer

By contributing $2,000 at the end of each of the 20 years, Bill will have contributed a total of $40,000.
Assuming he earns a 12% rate of return on his contributions, the future value of his IRA at the end of the 20th year can be calculated using the formula for compound interest:
FV = PV x (1 + r)^n
where FV is the future value, PV is the present value, r is the interest rate, and n is the number of periods.
Plugging in the values, we get:
FV = $40,000 x (1 + 0.12)^20
FV = $144,104.
Therefore, Bill will have $144,104 in his IRA at the end of the twentieth year.

Bill Clinton Plans to Fund His Individual Retirement Account (IRA)