In: Finance
Using TVM principles explain (calculate) what the results would be if your parents started saving a set amount monthly of $50 at 4% from when you were born to today. Explain your calculation. Please help me calculate if I was born in 1982 (so 38 years ago).
For example if my parents saving $20 per month from when I was born approximately 52 years ago how much would I have today ? You will use the future value calculation? PV = $0 N = 624 (52 years x 12 months) Rate = 4% Pmt = $20. The Future value would be $41,806.98.
Information provided:
Monthly saving= $50
Time= 38 years*12= 456 months
Interest rate= 4%/12= 0.3333% per month
The answer is computed by calculating the future value.
Enter the below in a financial calculator to compute the future value:
PMT= -50
N= 456
I/Y= 0.3333
Press the CPT key and FV to compute the future value.
The value obtained is 53,410.24.
Therefore, I will have $53,410.24 today.