Find the Future Value of the Annuity

question 230

Multiple Choice

Find the future value of the annuity.
-To save for retirement, you decide to deposit $2250 into an IRA at the end of each year for the next 40 years. If the interest rate is 2% per year compounded annually, find the value of the IRA,
Rounded to the nearest dollar, after 40 years.

• A) $301,714
• B) $135,904
• C) $131,034
• D) $2718

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Definitions:

Long Run

A time period in economics during which all inputs or factors of production can be varied, and no costs are fixed.

Expenditures

Money spent on goods, services, or other expenses by individuals, businesses, or governments.

Long Run Cost Curve

A graphical representation that shows the minimum cost at which any given level of output can be produced in the long term, once all inputs are variable.

Expansion Path

A line that shows the combination of inputs that a firm will use to maximize output for any given level of total cost.