Question

you have just made your first $5000 contribution to your retirement account. assuming you earn a rate of return of 5 percent and make no additional contributions, what will your account be worth when you retire in 35 years. what if you wait for 5 years before contributing

Answer 1

When you contribute $5000 today
Future Value = Present Value*((1+r)^t)
where r is the interest rate and t is the time period
Present value	5000
r	0.05
t	35
Future value	5000*((1.05)^35)
Future value	27580.08
The account will be worth $27580.05 when you retire in 35 years
When you contribute $5000 5 years from today
Future Value = Present Value*((1+r)^t)
where r is the interest rate and t is the time period
Present value	5000
r	0.05
t	30
Future value	5000*((1.05)^30)
Future value	21609.71
The account will be worth $21609.71 when you retire in 35 years