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Education IRA : Recursive Formula

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?

Solution Summary

A recursive formula is found that describes the growth of an education IRA. The solution is detailed and well presented.