You have just made your first $5,000 contribution to your individual retirement account. Assuming that you earn in the stock market an annual rate of 9.75% and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait 10 years before contributing? Does this suggest an investment strategy?

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Ramiro Cohen

3 November, 01:51

You have just made your first $5,000 contribution to your individual retirement account. Assuming that you earn in the stock market an annual rate of 9.75% and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait 10 years before contributing? Does this suggest an investment strategy?

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Answers (1)

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Manuel Brandt · Answer 1

1) The account will be worth $328,983 after 45 years.

Explanation:

If we make 9.75% annually for 45 years our account will be worth 5000 compounded at 9.75% for 45 years. So account worth after 45 years =

5000*1.0975^45=328,983