4. meagan invests $1,200 each year in an ira for 12 years in an account that earned 5%
compounded annually. at the end of 12 years, she stopped making payments to the
account, but continued to invest her accumulated amount at 5% compounded annually for
the next 11 years.
a. what was the value of the ira at the end of 12 years?
b. what was the value of the investment at the end of the next 11 years?
c. how much interest did she earn?

a. The value of the Ira at the end of 12 years is $19,100.55.

b. The value of the investment at the end of the next 11 years is $32,668.43.

c. Interest earn is  $18,288.43.

a. Using this formula to determine the value of the Ira at the end of 12 years

A=Pmt [(1+r)^n-1]/r

Let plug in the formula

A=1,200[(1+0.05)^12-1]/0.05

A=1,200[(1.05)^12-1]/0.05

A=$1,200(0.795856)/0.05

A=$955.02759/0.05

A=$19,100.55

b.  The value of the Ira at the end of 11 years is:

$19,100.55(1+0.05)^11

=$19,100.55(1.05)^11

=$19,100.55(1.710339358)

=$32,668.43

c. Interest earn    

Total investment=1200(12)

Total investment= $14,400  

Now let calculate the interest earned

Interest earned = $32,668.43 - $14,400

Interest earned= $18,288.43

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