Hal Thomas, a 25-year old college graduate, wishes to retire at age 65. To suppl

Question

Hal Thomas, a 25-year old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2000 each year into a tax-deferred individual retirement arrangement (IRA). The IRA will be invested to earn an annual return of 10%, which is assumed to be attainable over the next 40 years. D. Rework parts a, b, and c, assuming Hal makes all deposits at the beginning, rather than the end of each year. Dicuss the effect of beginning of year deposits on the future value accumulated by the end of Hal's sixty-fifth year.

Explanation / Answer

FV=PV*(1+i)^n;where PV is the present value, t is the number of compounding periods (not necessarily an integer), and i is the interest rate for that period =>FV=2000(1+10/100)^40 =>FV=90518.511

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