Question

Will give a medal and fan...

Ralph is 27 years old and starting an IRA (individual retirement account). He is going to invest $200 at the beginning of each month. The account is expected to earn 2.65% interest, compounded monthly. How much money will Ricky have in his IRA when he retires, at age 65?

$157,419.08

$94,723.10

$13,183.51

$416,424.15

Answer 1

I'll try to help, hold on. :)

Answer 2

Okay :D

Answer 3

Hmmm...I don't get any of those answers listed...

Answer 4

Do you know if there is a formula you can use?

Answer 5

Let me look it up lol I am sorry it took me a moment to respond I was working on something else

Answer 6

It's fine!

Answer 7

A = P(1 + r)^t this is the compound interest formula

Answer 8

FV = PV(1 + i)^nt this is the future value formula

Answer 9

Ok, so, using those formulas, what do you get? :)

Answer 10

I am not sure because I do not think this is the correct formula to solve this problem....

Answer 11

@amistre64

Answer 12

this is a loan of 0, with payments that are positive instead of negative; in other words B=0 and we are left with:\[A=P\frac{1-k^n}{1-k}\]

Answer 13

that might be a negative so just ignore the sign

Answer 14

Okay... what would I plug in for k? And P would be 200 correct?

Answer 15

P = 200, k is the same compounding stuff as usual

Answer 16

So .0265/12?

Answer 17

1+ but yeah

Answer 18

n= 12?

Answer 19

the number of periods it is compounded is 27 to 65 years, 12 times a year

Answer 20

oh, and since its a beginning of the month, we can assume an initial Balance of 200, not 0

Answer 21

payments still add to it so we dont have to subtract any payments

Answer 22

so we do not subtract 1 then?

Answer 23

why would we subtract 1? im assuming your using the formulas i developed

Answer 24

Yes I am lol

Answer 25

Idk I am so confused... Im going to try to do it and see if I get it correct lol... one second

Answer 26

\[A = Bk^n+P\frac{1-k^n}{1-k}\]
we start with a beginning balance of 200, and payments of 200

Answer 27

this format works well for loans to if we assume the B is negative, and we are trying to fill in the hole with payments

Answer 28

*too not that spelling counts in math lol

Answer 29

I got 35,395.01 0.o

Answer 30

I did something wrong....

Answer 31

prolly the time factor

Answer 32

http://www.wolframalpha.com/input/?i=200k%5E%28456%29%2B200%281-k%5E%28%2865-27%29*12%29%29%2F%281-k%29%2C+k%3D1%2B.0265%2F12

Answer 33

Yes it was the time that I did wrong... But I understand how to do it now... thank you so much! :D

Answer 34

youre welcome

Answer 35

im assuming the 619 is the result of me having an extra little 200 in the mix, but its close enough eh :)