Question

In: Advanced Math

You are advising a co-worker on saving for retirement. The co-worker gives you two possible scenarios:...

You are advising a co-worker on saving for retirement. The co-worker gives you two possible scenarios:

Scenario 1: Suppose you invest $170 a month for 6 years into an account earning 10% compounded monthly. After 6 years, you leave the money, without making additional deposits, in the account for another 22 years. How much will you have in the end?

Scenario 2: Suppose instead you didn't invest anything for the first 6 years, then deposited $170 a month for 22 years into an account earning 10% compounded monthly. How much will you have in the end?

Include the following in a report.

  • What is the future value of each scenario?
  • What is the total amount invested for each scenario?
  • What is the total interest earned for each investment?
  • How many more monthly deposits would you need to make for the first scenario to have the same future value as the second scenario?
  • How many more monthly deposits would you need to make for the second scenario to have the same total interest as the first scenario?

Solutions

Expert Solution

Colby Messinger answered 2 years ago
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