Assume that 25-year-old Denise wastes $10 per week buyinglottery tickets, averaging $520 per year....

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Accounting

Assume that 25-year-old Denise wastes $10 per week buyinglottery tickets, averaging $520 per year. Now let's assume thatDenise "sees the light" and decides to take that $520 she wouldhave spent on lottery tickets and deposit it at the end of eachyear in an annuity paying 6% compounded annually.
By now, Denise is 45 years old. She's got a pretty good job, butshe's starting to think about retirement and realizing that SocialSecurity just isn't enough to live on after age 65. Since her IRApays a little better interest than that 6% annuity paid, shedecides to move all the 6% money into the IRA account with theother money. IRA account pays 7% compounded monthly.
a. How much total money does she begin with in the IRA accountat this point?
Up to this point, Denise has been saving $1000 a year($520+$480). Because she's making better money now, she wants toincrease her investment in herself by putting $150 a month ($1800 ayear) into the IRA account on top of the money that's already inthere.

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3.7 Ratings (556 Votes)

As per the given information Denies saving the amount of $ 1000 per year and
From 25 years old upto 45 years old it means he is investing from 20 years
The rate of interest Is 6% compounding annually.

Age	Investment	Interest	Total

26	1000	60	1060
27	2060	124	2184
28	3184	191	3375
29	4375	262	4637
30	5637	338	5975
31	6975	419	7394
32	8394	504	8897
33	9897	594	10491
34	11491	689	12181
35	13181	791	13972
36	14972	898	15870
37	16870	1012	17882
38	18882	1133	20015
39	21015	1261	22276
40	23276	1397	24673
41	25673	1540	27213
42	28213	1693	29906
43	30906	1854	32760
44	33760	2026	35786
45	36786	2207	38993

a. The amount of $ 38993 is deposit in IRA account by Denise Waste

After opening and deposit the above amount to IRA account the Denise will invest of
$ 1800 per year in the place of $ 1000 per year and he will get the 7% compounding
Interest.

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Transcribed Image Text

In: AccountingAssume that 25-year-old Denise wastes $10 per week buyinglottery tickets, averaging $520 per year. Now...Assume that 25-year-old Denise wastes $10 per week buyinglottery tickets, averaging $520 per year. Now let's assume thatDenise "sees the light" and decides to take that $520 she wouldhave spent on lottery tickets and deposit it at the end of eachyear in an annuity paying 6% compounded annually.By now, Denise is 45 years old. She's got a pretty good job, butshe's starting to think about retirement and realizing that SocialSecurity just isn't enough to live on after age 65. Since her IRApays a little better interest than that 6% annuity paid, shedecides to move all the 6% money into the IRA account with theother money. IRA account pays 7% compounded monthly.a. How much total money does she begin with in the IRA accountat this point?Up to this point, Denise has been saving $1000 a year($520+$480). Because she's making better money now, she wants toincrease her investment in herself by putting $150 a month ($1800 ayear) into the IRA account on top of the money that's already inthere.