Question

Q1:

Suppose that you are now 35 and you have accumulated $87,000 in your savings account. Suppose also that you find a new investment account that will pay you an annual rate of 4% compounded quarterly. The future value at retirement age (65, 30 years from now) of your savings is closest to?

a. $497,530

b. $9,627,643

c. $287,134

d. $282,176

Q2:

Suppose that you are now 35 and you hace accumulated $87,000 in your savins account. Suppose also that you find a new investment account that will pay you an annual rate of 4%. The future value at retirement (age 65, 30 years from now) of your savings is closest to?

a. $497,530

b. $9,627,643

c. $287,134

d. $282,176

Answer 1

1.
PV = $87,000
Rate = 4% / 4 = 1%
Nper = 30 * 4 = 120
PMT = 0

Future value can be calculated by using the following excel formula:
=FV(rate,nper,pmt,pv)
=FV(1%,120,0,-87000)
= $287,134

The future value at retirement age of your savings is closest to $287,134

2.
PV = $87,000
Rate = 4%
Nper = 30
PMT = 0

Future value can be calculated by using the following excel formula:
=FV(rate,nper,pmt,pv)
=FV(4%,30,0,-87000)
= $282,176

he future value at retirement age of your savings is closest to $282,176