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

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