Question

If the maximum payment of $5,000 is made into a individual retirement account (ira) for 25 years at an annual interest rate of 3.2%, determine the amount in the account.round to the nearest cent. a. $187,159.62 b. $193,148.73 c. $129,082.99 d. $129,427.21

Answer 1

The amount in the ira's account s = $187,159.62.

How do you interest rate?

• The interest rate is the amount a lender charges a borrower and is a percentage of the principal—the amount loaned.
• The interest rate on a loan is typically noted on an annual basis known as the annual percentage rate (APR).

Future Value of an Ordinary Annuity

$s = R(( 1 + i)^{n} - 1 ) / i$

where

S = the future value;

R = the periodic payment;

i = the interest rate per period;

n = the number of periods.

$s = 5000 ( 1 + 0.032)^{25} - 1)/ 0.032$

$s = 5000((1.032)^{25} - 1 )/0.032$

$s = 5000( 2.19782157471 - 1)/0.032$

$s = 5000(1.19782157471)/0.032$

$s = 5000 * 37.4319242096$

s = $187,159.62

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