Suppose you put $3,000 per year into a Roth IRA. The account earns 6 percent interest per

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Suppose you put $3,000 per year into a Roth IRA. The account earns 6 percent interest per year. How much will you have when you retire in 30 years? This question asks for the future value of an annuity of $3,000 per year for 30 years at 6 percent, which we can calculate as follows:FV = C [ (1 +4 - 1] = r)t $3,000 X $3,000 x 79.0582 = = $237,174.56 1.06 30 .06

So, you’ll have close to a quarter million dollars in the account.

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Corporate Finance

ISBN: 9781265533199

13th International Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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