Question
In: Finance
Both John and Mary are aged 20 now. John plans to contribute $168 per month in...
Both John and Mary are aged 20 now. John plans to contribute $168 per month
in advance into his superannuation fund for 20 years and stop contributing thereafter.
Mary plans to start contributing $336 per month in advance into her superannuation fund
at her 40th birthday until she retires.
They both plan to retire at age 60.
If the annual rate of return is 12.80%, what are the accumulated values of their
superannuation accounts at retirement?
Assume: NO fees, NO tax.
Solutions
Expert Solution
| John'savings | ||||||||||||
| Future value of contribution of John at age 40 | $14,985.59 | (using FV function of excel with Rate=12.8%, Nper=20, Pmt=168, Type=1(beginning of year payment) | ||||||||||
| Value of investment after 20 years(at age 60) | $ 166,669.39 | (14985.59*((1+0.128)^20)) | ||||||||||
| Mary's Savings | ||||||||||||
| Future value of contribution of Mary at age 60 | $29,971.17 | (using FV function of excel with Rate=12.8%, Nper=20, Pmt=336, Type=1(beginning of year payment) | ||||||||||
| John | Mary | |||||||||||
| Accumulated values at retirement | $ 166,669.39 | $29,971.17 | ||||||||||
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jeff jeffy answered 1 month agoRelated Solutions
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