Question

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?

Answer 1

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yeants wil Invested in austhen 22 The anount PV 6618-92 Jate = 10/. (often 35 .02 28 ePT FV FN Seenanio a. Given PMT (22 jens 12 Mouutes) NN 22 12 ate CPT Fy Fv b2039 Su. hat is the ftune volu e d each Scenonio Scenanio i Ftune Value 3571.02 fertune volue Scenarto 2 62039.5y what is the totol amount inVested fon each Soenalo Total aount invested n Scenaio 1 porgments xmovitly faents X 72 140 - 2240 Tstal amount investe d. n Scenonto 2 ayments mowith pauet no. 6 26X10 What the totol tenest arned fon eac investmet

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