Lynne is 25 years old and starting and IRA (individual retirement account). She is going to invest $150 at the beginning of each month. The account is expected to earn %5.5 interest, compounded monthly. How much money rounded to the nearest dollar will lynne have in her IRA if she wants to retire at age 65

Question

Owen Morton

Mathematics

30 August, 12:42

Lynne is 25 years old and starting and IRA (individual retirement account). She is going to invest $150 at the beginning of each month. The account is expected to earn %5.5 interest, compounded monthly. How much money rounded to the nearest dollar will lynne have in her IRA if she wants to retire at age 65

+4

Answers (1)

Know the Answer?

Parker Strickland · Answer 1

The future amount of Lynnes retirement account can be computed using the formula of amortization or annuity:

P = A[ (1+i) ^n-1) ] / (i)

A = amortization

i = 5.5%

n = 40*12 = 480

Subsituting the variables in th formula, Future amount of Lynne in 40 years is equal to

P = $29,082.71