1. You plan on retiring in forty years and are contemplating retirement.

a. If you invest $2,000 a year in an IRA compounded at 6% APR, how much will you have when you retire?

b. You decide you will need about $500,000 when you retire. How many years will you have to work to accumulate the $500,000 at $2,000 per year at 6% APR?

c. If you want to retire in 40 years and have $500,000 (i.e. you want your cake and eat it too), how much will your annual deposits have to be at 6% APR?

d. You figure the tax law isn't going to change and the maximum annual deposit will remain $2,000. What interest rate will you have to earn to still have $500,000 in 40 years?

2. You can afford $1,000 a month for a house payment. You figure taxes and insurance will be about $250 a month. Assuming mortgage rates are 7% APR for a fixed rate loan, how much can you pay for a house assuming: a) a 20 year mortgage; b) a 25 year mortgage; c) a 30 year mortgage?

3. Your TV blows up while watching Springer. The new one you would like to have costs $500, which you don't have right now. Rent-To-Own has the TV you want for $10.56 per week, due on Monday of each week with the first payment to be made when you take possession. At the end of 1 year (52 payments), you own the set. What interest rate are they charging?

Answer rating: 100% (QA)

1a If you invest 2000 a year in an IRA compounded at 6 APR how much will you have when you retire To calculate the future value of an investment with annual deposits we can use the formula for the fut... View the full answer