You set up an IRA (individual retirement account) starting with a balance of $0 and an APR of 5%, compounded monthly at age 25. At the end of each month, you deposit $75 in the account. How much will the IRA contain when you retire at the age of 65?

This is an ordinary annuity because each $75 deposit is made at the end of the month. There are 40 × 12 = 480 deposits, and the monthly interest rate is 0.05 ÷ 12. Using the future value formula, $75 × [((1 + 0.05/12)^480 − 1) ÷ (0.05/12)] gives approximately $114,451.51, so the best answer is $114,451.51.

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