On January 1, 1999, John's parents decide to place $45 at the end of each month into an Education IRA.
a) Find a recursive formula that represents the balance at the end of the month if the rate of return is assumed to be 6% per annum compounded monthly.
b) How long will it be before the value of the account exceeds $4000?
c) What will be the value of the account in 16 years when John goes to college?
A recursive formula is found that describes the growth of an education IRA. The solution is detailed and well presented.