4. Looking forward - Future value Aa Aa Compounding Interest You know that paying yourself (by depositing money in a savings account) is a prudent start to your retirement plan. You determined that, based on your other obligations, you can save $6,000.00 per year via an annual, single year-end deposit. Let's say that you are age 30 now, so your money will grow for the next 35 years until you reach age 65. You will open a savings account at the Citibank branch near your home. Its savings accounts are paying 6% interest Future Value of Annuity Factors 5% 6% 8% Year 2% 3% 9% 10% 10 12.578 14.487 10.950 13.412 11.460 14.190 13.180 16.870 15.937 21.384 12 15.917 15.190 20.140 29.360 18.977 15 17.293 18.600 27.152 31.772 21.578 33.066 23.270 36.780 20 24.297 45.762 26.870 36.460 51.160 84.700 57.274 98.346 25 47.726 32.030 40.567 73.105 113.282 47.570 66.438 54.860 79.060 111.430 136.300 30 35 164.491 49.994 60.460 90.318 172.314 215.700 271.018 40 60.401 75.400 120.797 154.760 259.052 337.870 442.580 To calculate the value of this nest egg, enter the data provided by entering the correct value in the applicable entry field. Annual savings Years over which it will grow Interest rate Interest factor What will be the value of this money in 35 years? (Note: Round to two decimal places.) You began your savings program at age 30. If you had started five years earlier, such that your funds would grow for years, what would your nest egg be worth, assuming the same interest rate and annual savings amount? (Note: Round to two decimal places.) A new bank in town offers 8% interest. How much would your yearly deposits be worth if you open a savings account there, assuming that your funds are invested for 35 years and all other factors staying the same? To calculate the revised value of your nest egg, reenter the provided data, remembering to change the FVA factor based on the change in interest rate. Annual savings Years over which it will grow Interest rate Interest factor What will be the value of this money in 35 years? (Note: Round to two decimal places.) Again, if you had started your savings program five years earlier, what would your nest egg be worth, assuming that your funds were invested at this higher interest rate, the annual savings amount remains the same, and the funds are invested for years? (Note: Round to two decimal places.)