Question 1035631: Jeremy is looking at options for retirement investing. He finds an IRA that will pay 6% interest on the balance every year until he retires. Once he retires, it will no longer pay any interest on the balance. This is the option he chooses, and he invests $4,000 in the account. He then retires 25 years after he opened the account.
a. Write an exponential function to model this situation using the formula A = P(1 + r)^t. Is it growth or decay?
b. If he hasn’t withdrawn any money, how much is in the account when he retires?
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Jeremy is looking at options for retirement investing. He finds an IRA that will pay 6% interest on the balance every year until he retires. Once he retires, it will no longer pay any interest on the balance. This is the option he chooses, and he invests $4,000 in the account. He then retires 25 years after he opened the account.
a. Write an exponential function to model this situation using the formula A = P(1 + r)^t. Is it growth or decay?
A(25) = 4000(1.06)^25
Growth
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b. If he hasn’t withdrawn any money, how much is in the account when he retires?
A(25) = $17,167.48
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Cheers,
Stan H.
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