We assume an age at retirement of 67. Assuming that you start with zero dollars, at...

We assume an age at retirement of 67. Assuming that you start with zero dollars, at your age**, today, and you begin setting aside $500 per month, each month, from the present until age 67. How much money will you have set aside?

Now, assume that your savings are invested at a annual return rate of 7%. How much money will you have at age 67? Would it make a difference if you invested an additional $100 each month, for a total of $600?

What can we learn from your results?

** Starting age is 20 **

Solutions

Expert Solution

1. Value of Deposits of $ 500 at the age of 67: $2357958.56

2. Value of Deposits of $ 600 at the age of 67: $2829550.27

3. Conclusion: the lesson we can learn from the results is that the value of deposits will increase at an compounded rate just because the deposit amount increased by $100 i.e., from $2357958.56 with $500 deposit to $2829550.27 with $600 deposit

*NPER=(67 years - 20 years + 1) * 12

Please comment if you face any difficulty and please dont forget to upvote

jeff jeffy answered 1 year ago

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