In: Finance
12. Your friend thought you were goofy for saving so young and instead spent it on "living". Your friend started investing $3,500 at the end of each year at age 30 through age 67 this morning (a total of 38 years). Your friend is bemoaning the fact that s/he worked so long and you did not, but bragged how much was in their retirement account, so “at least that is a benefit”. S/he also earned 8.77%, how much is in the account?
FV of Annuity : |
Annuity is series of cash flows that are deposited at regular intervals for specific period of time. |
FV of Annuity = CF [ (1+r)^n - 1 ] / r |
r - Int rate per Year |
n - No. of Years |
FV of Annuity | |
Particulars | Amount |
Cash Flow | $ 3,500.00 |
Int Rate | 8.770% |
Periods (Given) | 38 |
FV of Annuity = Cash Flow * [ [ ( 1 + r ) ^ n ] - 1 ] /r |
= $ 3500 * [ [ ( 1 + 0.0877 ) ^ 38 ] - 1 ] / 0.0877 |
= $ 3500 * [ [ ( 1.0877 ) ^ 38 ] - 1 ] / 0.0877 |
= $ 3500 * [ [24.3976] - 1 ] / 0.0877 |
= $ 3500 * [23.3976] /0.0877 |
= $ 933769.17 |