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Suppose you begin saving for your retirement by depositing $2,000 per year in an IRA....

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Finance

Suppose you begin saving for your retirement by depositing $2,000 per year in an IRA. If the interest rate is 7.5%, how much will you have in 40 years?

2000((1+0.075)^40-1)/0.075

=2000(1.075)^40-1/0.075

=2000(18.044239-1)/0.075

=2000(17.044239)/0.075

=34088.478/0.075

=$454,513.04

Suppose the following

a. Suppose you can earn 1% per month on $1 invested today. How much are you effectively earning?

b. Suppose if you put it in another account, you earn 3% per quarter. What is the APR? Effective Rate?

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