Question

Assume you just opened a Roth IRA by investing a $10,000 lump sum into Vanguard's S&P 500 Index mutual fund. You also plan to invest an additional $5000 per year into the Roth IRA at the end of each year for 37 years. How much will you have in your Roth IRA at the end of 37 years? Assume you can earn an 8% per year. (HINT: Set up your timeline of all cash flows.] $861,584 $1,009,437 $1,187,808 $1,223,709

Answer 1

1)

Function Arguments FV Rate 8% 0.08 Nper 37 37 Pmt -5000 -5000 Pv -10000 -10000 Type 1187807.855 Returns the future value of an investment based on periodic, constant payments and a constant interest rate. Type is a value representing the timing of payment: payment at the beginning of the period = 1; payment at the end of the period = 0 or omitted. Formula result = $1,187,808 Help on this function Cancel Ок

Hence, correct option is $1,187,808

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