Question 999919: Here is my problem: At age 27, Lauren Johnson deposited $1,000 into an IRA, in which it earns 7 7/8 % compounded monthly. (a) What will it be worth when she retires at 65? (b) How much would the IRA be worth if Lauren didn't set it up until she was 35? How would you solve this? Thank You!
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Here is my problem: At age 27, Lauren Johnson deposited $1,000 into an IRA, in which it earns 7 7/8 % compounded monthly.
(a) What will it be worth when she retires at 65?
65-27 = 38 years
7 7/8% = 7.875/100 = 0.07875
A(38) = 1000*(1+(0.07875/12))^(12*38)
A(38) = 1000*(1.00656)^(456)
A(38) = 1000*19.74151
A(38) = $
19,741.51
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(b) How much would the IRA be worth if Lauren didn't set it up until she was 35? How would you solve this? Thank You!
65-35 = 30
Find A(30)
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Cheers,
Stan H.
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