You decide that, starting when you are 20 years old, you will save $5 a day...

You decide that, starting when you are 20 years old, you will save $5 a day for retirement. At the end of the year, you invest the accumulated savings ($1,825) in a brokerage account with an expected annual return of 8%. If you continue the practice every year until you are 65, how much money will you have? Please use two decimals rounded up.

Expert Solution

Deposit amount (P) = 1825

Number of deposits = n= 65-20= 45

Rate= r= 8% pa

Accumulated amount at the age of 65= Future Value of annuity = A* ((1+rate)^n-1)/rate

= 1825*((1+8%)^45-1)/8%

=1825*386.5056174

= $705372.75

jeff jeffy answered 2 years ago

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You decide that, starting when you are 20 years old, you will save $5 a day...

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