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:

Firm's Operations

The day-to-day activities involved in the running of a business for the purpose of producing value for the stakeholders.

Quick Ratio

An indicator of a firm's capacity to fulfill its immediate liabilities using its most easily convertible assets.

Debt-Equity Ratio

A measure of a company's financial leverage, calculated by dividing its total liabilities by its shareholder equity, indicating the extent to which it is financing its operations through debt.

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term liabilities with its short-term assets.