Question
You are graduating from college at the end of this semester and have decided to invest $4,500 at the end of each year into a
You are graduating from college at the end of this semester and have decided to invest $4,500 at the end of each year into a Roth IRA (a retirement investment account that grows tax free and is not taxed when it is liquidated) for the next 30 years. If you earn 4 percent compounded annually on your investment of $4,500 at the end of each year, how much will you have when you retire in 30 years? How much will you have if you wait 10 years before beginning to save and only make 20 payments into your retirement account?
Ahmed just turned 25 and wants to have $11,627 saved in 5 years, by his 30th birthday. Assuming no additional deposits, if he currently has $6,900 in an intermediate-term bond fund earning a 9 percent yield, will he reach his goal? If not, what rate of return is required to meet his goal?
Linda Baer has already saved $4,993 to buy a used vehicle. Ignoring taxes and assuming her money is invested in a money market account earning 5 percent compounded annually, how long will it take to buy a car that costs $8,133?
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