Aaron wants to put $200.00 per month into an IRA account at 15% for four years. What is he solving for using his financial calculator
A. present value
B. future value
C. interest rate
D. payment
He probably is solving for future value, however, one needs to think always in present value.
To solve this problem using a financial calculator, Aaron needs to determine the value he is solving for. The options given are:
A. Present value
B. Future value
C. Interest rate
D. Payment
In this case, Aaron wants to put $200.00 per month into an IRA account for four years at a given interest rate. He wants to know the value of an IRA account at the end of the four years, which represents the future value.
Therefore, Aaron is solving for option B: Future value.