Edward Johnson Decided to Open Up a Roth IRA

question 87

Multiple Choice

Edward Johnson decided to open up a Roth IRA. He will invest $1,800 per year for the next 35 years. Deposits to the Roth IRA will be made via a $150 payroll deduction at the end of each month. Assume that Edward will earn 8.75% annual interest compounded monthly over the life of the IRA. How much will he have at the end of 35 years?

• A) $125,250
• B) $250,321
• C) $363,000
• D) $414,405

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Definitions:

Tax Shift

The process by which the economic burden of a tax is transferred from the entity legally responsible for it to another party, typically from sellers to buyers or vice versa.

Polluters Pay

The principle that those who produce pollution should bear the cost of managing it to prevent damage to human health or the environment.

Environmental Damage

The harm caused to the natural environment due to human activities or natural disasters.

Import Quota

A restriction set by a government on the quantity of a certain good that can be imported into the country.