Question

Advance algebra financial applications HELP PLEASE!
Yon made contributions to a Traditional IRA over the course of 15 working years. Her contributions averaged $4,000 annually. Yon was in the 29% tax bracket during her working years. The average annual rate of return on the account was 5%. Upon retirement, Yon stopped working and making IRA contributions. Instead, she started living on withdrawals from the retirement account. At this point, Yon dropped into the 15% tax bracket. Factoring in taxes, what is the effective value of Yon’s Traditional IRA at retirement? Assume annual compounding.

Answer 1

Answer choices
$74,230.25

$25,031.13

$73,367.11

$141,367.11

Answer 2

@ganeshie8 can you walk me through this please?

Answer 3

okay just gimme 5 minutes brb

Answer 4

No problem I know im going to use FVOA @ganeshie8

Answer 5

Yes, use FVOA and find out the accumulated sum first.

Answer 6

\[ FVOA = C \bullet \frac{(1+i)^{nt}-1}{i} \]

Answer 7

\(C\) = periodic cash payment = $4,000
\(i\) = periodic interest rate = 0.05
\(n\) = 1
\(t\) = 15

Answer 8

plug and chug

Answer 9

the sum is 86,314.25

Answer 10

yes, you need to cut out the taxes from that

Answer 11

whats the tax percent ?

Answer 12

15% so .15*86,314.25= 12,947.14

Answer 13

yes, u need to give it off to government as tax

Answer 14

so effective money u wil be having when u retire = ?

Answer 15

73,367.11

Answer 16

Perfect !

Answer 17

You could have gotten that by simply taking 85% of the accumulated money

Answer 18

instead of calucatign 15% and subtracting..

Answer 19

Yayy thank you for your help i did another problem like this the same way but got it wrong i dont understand how if it's set up the same way could you take a look at it maybe i used the wrong formula

Answer 20

15% tax takes away,
that means u wil be getting 85%

so .85*86,314.25= 73,367.11

Answer 21

sure, post it :)