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Tom Huston, a 2 5 - year - old college graduate, wishes to retire at age 6 5 . To supplement other sources of retirement
Tom Huston, a yearold college graduate, wishes to retire at age To supplement other sources of retirement income, he can deposit $
each year into a taxdeferred individual retirement arrangement IRA The IRA will earn a return over the next years.
a If Tom makes endofyear $ deposits into the IRA, how much will he have accumulated in years when he turns
b If Tom decides to wait until age to begin making endofyear $ deposits into the IRA, how much will he have accumulated when he
retires years later?
c Using your findings in parts a and b discuss the impact of delaying deposits into the IRA for years age to age on the amount
accumulated by the end of Tom's sixtyfifth year.
d Rework parts and c assuming that Tom makes all deposits at the beginning, rather than end, of each year. Discuss the effect of
beginningofyear deposits on the future value accumulated by the end of Tom's sixtyfifth year.
Answers insert your answers in the highlighted cells; use cell references, equations, and functions wherever possible
a
Annual deposits
Return
Number of years
Future value
b
Annual deposits
Return
Number of years
Future value
c
d
Annual deposits
Return
Number of years
Future value
Annual deposits
Return
Number of years
Future value
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