each begin full time jobs in January 2009 and plan to retire in January 2051 aft
ID: 3144124 • Letter: E
Question
each begin full time jobs in January 2009 and plan to retire in January 2051 after working for 42 years. Each man is in a 30% marginal tax bracket. Assume that any money they deposit into IRAs 6% interest compounded annually. Answer parts (a) through (d) below. (a) Suppose opens a (RA account immediately. deposits the remainder of $5000 after taxes are deducted into his account at the end of each year for 6 years. After that he makes no further deposits the money earn interest. How much money will have in his account when he retires in January 2051? F = $ (Do not round untill the final answer. Then round to the nearest cent as needed.)Explanation / Answer
So deposit every year = 5000*70% = $3500
Interest on money deposited in Dec 2009 is for 41 years till Jan 2051
Interest 1 = 3500 (1+6%)^41
Similarly interest on the deposit of Dec 2010 is for 40 years till Jan 2051
Interest 2 = 3500 (1+6%)^40
Similary others follow
Total interest = 3500(1+6%)^41+3500(1+6%)^40+3500(1+6%)^39+3500(1+6%)^38+3500(1+6%)^37+3500 (1+6%)^36
Total interest = 198,904
principal added = 21,000
total amount at Jan 2051 = 219,904
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