Question

You plan on retiring in 43 years. You expect the IRA to have an APR of 5.3%, compounded monthly. How much money will you have when you retire? Use $265.35 as the monthly amount.

Answer 1

Number of years is 43 years

rate per anum is 5.3%

Principal is $265.35

n is 12 month

t is 43 years

Using a compound interest formula

$A=P(1+\frac{r}{100n})^{nt}$$A=265.35(1+\frac{5.3}{12\times100})^{12\times43}$$A=265.35(1+0.004417)^{516}$$\begin{gathered} A=265.35(1.004417)^{516} \\ =265.35\times9.71968511 \\ =2579.12 \end{gathered}$

Hence, I will have $2579.12 when I retire