4. Looking forward - Future value Compounding Interest You know that paying yourself by depositing money in a savings account is a prudent stort to your retirement plan. You determined that, based on your other obligations, you can save 7,000.00 per year via an annual, single year-end deposit. You are 40 years old now, so your money will grow for the next 25 years until you turn 65. You will open a savings account at the US Bank branch near your home. Its savings accounts are paying 6% interest The following table shows the future value factors for various periods and interest rates: Future Value of an Annuity Factor 3% 5% 6% 8% Year 2% 9% 10% 15.937 10 10.950 11.460 13.180 14.487 12.578 15.917 15 190 20.140 12 13.412 16.870 18.977 21.384 14.190 13.600 15 17.293 21.578 23.270 29.360 31.772 27.152 45.762 20 33,066 36.780 51. 160 57.274 24.297 32.030 26,870 36.460 25 73.105 34.700 98 346 47.726 66.438 54.860 29.060 30 40.567 47.570 113.282 164.491 136,300 215.700 35 90.318 111.430 271,018 49.994 60:401 60.460 75.400 172.314 259.052 40 120.797 154.760 337.870 442.580 Complete the following table by entering relevant values. Then use the table of future value factors to calculate the value of this nest egg. Annual savings Years over which it will grow Interest rate 96 Interest factor What will be the value of this money in 25 years? (Note: Round to two decimal places.) S You began savings at age 40. If you had started five years earlier, so that your funds would grow for be worth, assuming the same interest rate and annual savingt amount? (Note: Round to two decimal places.) S years, what would your nest egg Suppose that 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 25 years and all other factors remain the same? Complete the following table by entering relevant values. Then use the table of future value factors to calculate the value of this neste99 (Hint: Remember that the PVA factor is based on the new interest rate now.) Annual savings Years over which it will grow Interest rate Interest factor 12 What will be the value of this money in 25 years? (Note: Round to two decimal places) Complete the following table by entering relevant values. Then use the table of future value factors to calculate the value of this rest egg. (Hint: Remember that the FVA factor is based on the new interest rate now.) $ Annual savings Years over which it will grow Interest rate Interest factor What will be the value of this money in 25 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)