Faith wants to retire in 35 years. She makes annual contributions to a Roth IRA in the amount of $3,950. She is taxed at 35% today, but anticipates that will change to 25% in her retirement. If the average annual rate of return on the account is 6.3%, what is the net value of Faith's IRA account when she retires?

$305,053.33

$351,984.61

$420,925.32

$434,750.32

I am so stuck. This is my last resort :( Any help (or the answer with an explanation) would be so appreciated.

Question

Faith wants to retire in 35 years. She makes annual contributions to a Roth IRA in the amount of $3,950. She is taxed at 35% today, but anticipates that will change to 25% in her retirement. If the average annual rate of return on the account is 6.3%, what is the net value of Faith's IRA account when she retires?

$305,053.33

$351,984.61

$420,925.32

$434,750.32

I am so stuck. This is my last resort :( Any help (or the answer with an explanation) would be so appreciated.

rileyvc · Answer

I got $351,984.61; I used the future value of an ordinary annuity formula to solve.