QuickHelper

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Teaching Since: May 2017
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Education

  • MBA, PHD
    Phoniex
    Jul-2007 - Jun-2012

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  • Corportae Manager
    ChevronTexaco Corporation
    Feb-2009 - Nov-2016

Category > Engineering Posted 14 Sep 2017 My Price 15.00

week 4 DF Math

It is wise to start saving for retirement as soon as possible. Suppose you were to invest $5,500 at the end of each year into a Roth IRA, which is a retirement account with no upfront tax deduction, yet the earned interest is not taxed.

Discuss the following:

  • Assuming you can earn an average of 6% interest per year, what will the future value of your annuity be 35 years from now? Use the following formula:
    • A = P[(1 + r)t – 1] / r
      • A = Future value
      • P = Principal (investment amount)
      • r = 0.06
      • t = 35 years
  • How much of your future value is your money that you contributed, and how much is earned interest?
  • What if you start saving 5 years earlier and are able to save $5,500 per year for 40 years at the same 6% interest per year? How much money will you have in your account?
  • How much of your future value is your money that you contributed, and how much is earned interest?
  • By saving for 5 years longer, you contributed an extra $27,500 (5 x $5,500), but you ended up with a higher balance in your retirement account. How much more will you have in your account?
  • What have you learned with regard to the length of loans or investments?

Answers

QuickHelper
(10)
Status NEW Posted 14 Sep 2017 02:09 PM My Price 15.00

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