Explore BrainMass

Explore BrainMass

    Annuity

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A husband and wife contribute $4,000 per year to an IRA paying 10%, compounded annually, for twenty years. What is the value of their IRA? How much can they withdraw each year for 25 years at 10% compounded annually?

    © BrainMass Inc. brainmass.com March 4, 2021, 6:02 pm ad1c9bdddf
    https://brainmass.com/business/finance/annuity-25196

    Solution Preview

    What is the value of their IRA?

    Equal contribution = $4,000
    No of years=n= 20
    Rate of interest=r= 10.00%
    To calculate the value of the IRA amount we need to calculate / read from tables the values of
    FVIFA= Future Value Interest Factor for an Annuity
    The formula for FVIFA is
    FVIFA( n, r%)= =[(1+r%)^n -1]/r%

    FVIFA (20 periods, 10.% rate)= 57.2750

    Amount at the end of 20 years= Annual amount deposited ...

    Solution Summary

    Calculates the amount of annual withdrawal froma fund.

    $2.49

    ADVERTISEMENT