Question

In: Finance

Henry and Bob are both 35 years old but have been investing different amounts of money...

Henry and Bob are both 35 years old but have been investing different amounts of money for different lengths of time.

  • Henry saved $15 each month for 12 years at an average interest rate of 3.6% compounded monthly until he was 25. Then he reinvested the entire amount at 3.8% compounded monthly for 10 years.
  • Bob has been depositing $18 each month for the past 10 years into a savings account that earns an average annual interest rate of 3.8% compounded monthly.

a) Determine the total value of each of the above investments. Complete the tables or show your formula calculations as part of your solution.

Solutions

Expert Solution

Answer:

The question does not say whether the monthly savings were deposited at the end of month or beginning of month:

Hence please find two sets of answers:

Answer (i)

Assuming monthly savings were made at the END of MONTH each month:

Above excel with 'show formula' is as follows:

Answer (ii)

Assuming monthly savings were made at the BEGINNING of MONTH each month:

The above excel with 'show formula' is as below:

jeff jeffy answered 4 months ago
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