10
QuizMultiple Choice

Retirement Savings Options

Question 10 • 26-27 Ignite Financial Literacy Personal Finance - EL3403

Nicole is considering opening a Roth Individual Retirement Account. If she invests into the Roth IRA, determine the amount in the account if she makes annual payments of $4,291 into an account paying 2.23% interest compounded annually for 30 years.

Answer
A
$132,259.66
B
$132,505.45
C
$184,513.76
D
$180,488.86

Explanation

For annual payments made at the end of each year, use the future value of an ordinary annuity: 4,291 × [(1.0223^30 − 1) ÷ 0.0223]. This gives approximately $180,488.86, so the account will contain about $180,488.86. The correct choice is $180,488.86.

AI-written and checked against the verified answer.

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