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29 December, 06:31

You have just made a $1,500 contribution to your individual retirement account. Assume you earn a rate of return of 8.7 percent and make no additional contributions. How much more will your account be worth when you retire in 25 years than it would be if you waited another 5 years before making this contribution?

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  1. 29 December, 06:36
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    Instructions are listed below

    Explanation:

    Giving the following information:

    You have just made a $1,500 contribution to your retirement account. Assume you earn a rate of return of 8.7 percent and make no additional contributions.

    To find the final value we need to use the following formula:

    FV = PV * (1+i) ^n

    A) n = 25

    FV = 1500 * (1.087^25) = 12073.41

    B) n = 20

    FV = 1500 * (1.087^20) = $7955.77
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