14. Hal Thomas, a 25-year-old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2,000 each year into a tax-deferred individual retirement arrangement (IRA). The IRA will be invested to earn an annual return of 10%, which is assumed to be attainable over the next 40 years. Question: If Hal decides to wait until age 35 to begin making $2,000 deposits into the IRA at the beginning of each year, how much will he have accumulated by the end of his 65th year?
14. Hal Thomas, a 25-year-old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2,000 each year into a tax-deferred individual retirement arrangement (IRA). The IRA will be invested to earn an annual return of 10%, which is assumed to be attainable over the next 40 years. Question: If Hal decides to wait until age 35 to begin making $2,000 deposits into the IRA at the beginning of each year, how much will he have accumulated by the end of his 65th year?
Chapter15: Choice Of Business Entity—other Considerations
Section: Chapter Questions
Problem 94TPC
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Transcribed Image Text:14. Hal Thomas, a 25-year-old college graduate, wishes to retire at age 65. To
supplement other sources of retirement income, he can deposit $2,000 each year into
a tax-deferred individual retirement arrangement (IRA). The IRA will be invested to
earn an annual return of 10%, which is assumed to be attainable over the next 40
years.
Question: If Hal decides to wait until age 35 to begin making $2,000 deposits into
the IRA at the beginning of each year, how much will he have accumulated by the
end of his 65th year?
Transcribed Image Text:15. An insurance agent is trying to sell you an immediate-retirement annuity, which
for a single amount paid today will provide you with $12,000 at the end of each year
for the next 25 years. You currently earn 9% on low-risk investments comparable to
the retirement annuity. Assuming all other factors are constant, what is the most you
would pay for this annuity?
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