Question

You are

2424

years old and decide to start saving for your retirement. You plan to save

$ 6 comma 500$6,500

at the end of each year​ (so the first deposit will be one year from​ now), and will make the last deposit when you retire at age

6767.

Suppose you earn

11 %11%

per year on your retirement savings.

a. How much will you have saved for​ retirement?

b. How much will you have saved if you wait until age

3838

to start saving​ (again, with your first deposit at the end of the​ year)?

Answer 1

a) Years of savings = 67-24 = 43

Future value of annuity /amount saved = FVA 11%,43* Annuity amount

           = 799.07* 6500

         = $ 5,193,955

b)years of savings : 67-38 = 29 years

Amount saved = FVA 11%,29* A

         = 178.39719* 6500

          = $ 1,159,581.74

FUture value annuity factor can be find from annuity table at 11% for n periods .