Please explain your option to me Diane just graduated and look a good position m
ID: 3252086 • Letter: P
Question
Please explain your option to me Diane just graduated and look a good position managing a local firm. She decides to set $250 a month for retirement into a tax-sheltered annuity that guarantees 2.4% compounded monthly. She recognizes in them meantime she is also saving state and federal income taxes on the investment by talking earnings out before taxes are calculated, in addition to deferring the tax burden of the interest earns until after she retires If she keeps this up for her professional life, how much will be in the account when she retires 40 years from now? A. $201, 149 B. $297, 781 C. $309, 870 D. $313, 103 E. None of these
Explanation / Answer
from above monthly investment p=250
rate of interest r=2.4%/12
and number of periods=12*40=480
hence future value =p*((1+r)n-1)/r=201149 hence option A is correct.