Question
Hal Thomas, a 25-year old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2000 each
Hal Thomas, a 25-year old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2000 each year into a tax-deferred individual retirement arrangement (IRA). The IRA will be invested to earn an annual return of 10%, which is assumed to be attainable over the next 40 years. a.) If Hal decided to wait until age 35 to begin making annual end of year $2000 deposits iinto the IRA, how much will he have accumulated by the end of his sixty-fifth year?
b)
If Hal decides to wait until age 35 to begin making annual end-of-year $2,000 |
deposits into the IRA, how much will he have accumulated by the end of his |
sixty-fifth year? |
c.) using your findings in parts a and b , discuss the impact of delaying making deposits into the IRA for 10 years (age 25 - 35) on the amount accumulated by the end of Hal's sixty-fifth year.
d) rework parts a,b, and c, assuming that Hal makes all deposits at the begining, rather than the end, of each year. Discuss the effect of the beginig-of-year deposits on the future value accumulated by the end of Hal's sixty-fifth year.
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