Answer 1:
Working:
Monthly saving from Year 10 to Year 31 (22 years) = $200
Monthly interest = 0.25%
Number of months = 22 * 12 = 264
Hence:
Balance in saving account in 31 years = FV (rate, nper, pmt, pv, type) = FV (0.25%, 264, -200, 0, 0) = $74,655.96
Balance in saving account in 31 years = $74,655.96
Answer 2:
Working:
At the start of Year 10, salary increase per month = $150
Monthly interest = 0.25%
Number of months = 22 * 12 = 264
Present value of the increase at the start of Year 10 = PV (0.25%, 264, -150, 0, 0) = $28963.36
Present value of the increase today = 28963.36 / (1 + 0.25%) ^(9*12) = $22,117.48
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