Bill plans to fund his individual retirement account (IRA) by contributing R2,000 at the end of each year for the next 20 years. If Bill can earn 12 percent on his contributions, how much will he have at the end of the twentieth year?
R19,293
R14,939
R40,000
R144,105
To calculate the future value of Bill's contributions, we can use the formula for compound interest:
FV = P * ((1 + r)^n - 1) / r
where:
FV = future value
P = annual contribution (R2,000)
r = annual interest rate (12% or 0.12)
n = number of years (20)
Plugging in the values, we get:
FV = 2000 * ((1 + 0.12)^20 - 1) / 0.12
FV = 2000 * (6.727499 - 1) / 0.12
FV = 2000 * 5.727499 / 0.12
FV = 96,449.98
Therefore, Bill will have R96,449.98 at the end of the twentieth year. None of the given options appears to be correct.