Question

Please help!

Lisa is 21 years old and starting an IRA (individual retirement account). She is going to invest $50 at the beginning of each month. The account is expected to earn 2.5% interest, compounded monthly. How much money, rounded to the nearest dollar, will Lisa have in her IRA if she wants to retire at age 52?

Answer 1

Hi,

Ok lets set up the problem. She is going to invest $50 each month and earn 2.5% interest as well. And there asking us to find how much money she would have in her IRA if she retired at age 52.
First lets find out how many years she contributes to her IRA.
Lets subtract 52 from 21.
\[52-21=31\]
So she will invest for 31 years.
Now lets find out how much she contributes each year by multiplying 50 by 12.
\[50\times12=600\]
So she invested $600 a year.
Now lets find out how much her account will earn her in a month and in a year.
2.5% of $50=1.25
So her account earned her $1.25 a month and
\[1.25\times12=15\]
$15 a year
So now lets add $600+$15=$615
So she has $615 at the end of each year.
Now lets multiply that by 31 years.
\[615\times31=19,065\]
Now lets round to 19,000.
Hope I helped(:

Answer 2

thanks so much for all the work, this is what I thought too but then y answer choices are
$28,052

$28,111

$40,676

$40,731

so i dontknow :/ @TheStudyOwl

Answer 3

Hmm, that's interesting. Let me try something else and I'll see what I get.

Answer 4

I tried everything and nothing is coming close to any of those answers. :( Maybe someone else could help(: Sorry about that. Good Luck(: