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Patty Stacey depouts $200 at the end of each of 5 years in an IRA
Patty Stacey depouts $200 at the end of each of 5 years in an IRA. If she leaves the money that has accumulated in the IRA account for 25 additional years, how much is in her account at the end of the 30-year period? Assume an interest rate of compounded annually. (Round your answer to the nearest cont.) (b) suppose that Patty's husband delays starting an IRA for the first 10 years he works but then make 2000 deposits at the end of each of the next 15 years. If the interest rate is 1 compounded annually, and it he leaves the money in his account for additional years, how much will be in his account at the end of the year period (Round your answer to the more tel Dos Patty or her husband have more tra money? Patty Patty's husband
Expert Solution
1. Use FV function in EXCEL
=FV(rate,nper,pmt,pv,type)
rate=6%;nper=5 years;pmt=2800;pv=0
=FV(6%,5,-2800,0,0)=15783.86
Now if we keep this for additional 25 years, use sam formula
nper=25 years;pmt=0;pv=15783.86
=FV(6%,25,0,-15783.86,0)=67742.29
The accumulated value=$67742.29
2. In second case,
=FV(6%,15,-2800,0,0)=65172.72
Then leave for next 5 years
=FV(6%,5,0,-65172.72,0)=$87215.80
3. Parity's husband will have more accumualted value
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