Question

a) If you put $200 each month in your piggy back for 30 years, how much will you have saved?

b) If you invest $200 each month in an account paying 6% APR for 30 years, how much will you have saved?

Answer 1

a.Monthly deposit= $200

Time= 30 years*12=360 months

The amount saved at the 30 years is calculated with the help of a financial calculator.

The below has to be entered in a financial calculator:

PMT= 200; N=360

Press CPT and FV to calculate the amount saved

The amount saved at the end of 30 years is $72,000.

b.Monthly deposit= $200

Time= 30 years*12=360 months

Yield to maturity= 6%/12= 0.50%

The amount saved at the 30 years is calculated with the help of a financial calculator.

The below has to be entered in a financial calculator:

PMT= 200; N=360; I/Y= 0.50

Press CPT and FV to calculate the amount saved

The amount saved at the end of 30 years is $200,903.