2 0-72 points Bef nkt1 2.37 Notes O Ask Yor In the folowing ordnary annuly,the i

Question

2 0-72 points Bef nkt1 2.37 Notes O Ask Yor In the folowing ordnary annuly,the interest is compounded with each payment, and the payment is mate at the end of the compounding perlod. Incitual retiement accont, r IRA, eans ta delered nterest and alws the ouner to ivet u to $500 each year, be and llbuth wll make IRA deoit for 30 years(rom age 35 st k ut fud y .7% Iedep itsSS00oceeahyear, wh Jl S9615 which 500 52 withheld he weekly pay anddepo ted to at 1 Ho m h e at age 652 (Round your answer to the nearest cent) oe $ h e

Explanation / Answer

For Joe :

Total time period t= 30 years

deposit amount P= $ 5000

Yield i = 9.7%

Final amount at year 65 is = P [(1+ r)t -1]/ i = 5000 * [(1 + 9.7/100)30 -1]/(9.7/100) = $777153. 15

For JIll :

Total time period t= 30 years = 52 * 30 = 1560 weeks

deposit amount P= $ 96.15

Yield i = 9.7% = 9.7/52 %

Final amount at year 65 is = P [(1+ r)t -1]/ i = 96.15 * [(1 + 9.7/5200)1560 -1]/(9.7/5200) = $ 892083.13

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