Question

1) You earn $5,000 a month. After taxes, social security contributions, and living expenses you have $200 per month that you can and will save. What is the future value of $200 saved every month for 30 years if the annual rate is of return is 12% assume annual compounding period. We are looking for the value of your savings 30 years from the time you stated saving.

2) You earn $5,000 a month. After taxes, social security contributions, and living expenses you have $100 per month that you can and will save. What is the future value of $100 saved every month for 30 years if the annual rate is of return is 12% assume annual compunding period. We are looking for the value of your savings 30 years from the time you stated saving

Answer 1

1.

Monthly Saving = $200

Annual Interest rate = 12%

Tenure = 30 year

Cumulative value after 30 year is calculated in excel and screesn shot provided below:

Cumulative value after 30 year will be $698,992.83.

2.

Monthly Saving = $100

Annual Interest rate = 12%

Tenure = 30 year

Cumulative value after 30 year is calculated in excel and screesn shot provided below:

Cumulative value after 30 year will be $349,496.41