4. Looking forward Future value 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 $6,875.00 per year is 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: Year 10 9% 108 2% 10.950 13.412 15.190 15.937 12 Future Value of an Annuity Factor 3% 5% 6% 8% 11.460 12.578 13.180 14.487 14.190 15.917 16.870 18.977 18.600 21.578 23.270 27.152 26.870 33.066 36.780 45.762 36.460 47.726 54.860 73.105 21.384 15 12.293 20.140 29.360 31.772 20 24.297 32.030 25 30 47.570 66.438 79.060 113.282 40.567 49.994 51.160 57.274 84.700 98.346 136,300 164.491 215.700 271.018 337.870 442.580 35 60.460 90.318 111.430 154.760 60.401 172314 259.052 40 75.400 120.797 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 S 96 Interest factor What will be the value of this money in 25 years? (Note: Round to two decimal places.) S You began saving at age 40. If you had started five years earlier, so that your funds would grow for worth, assuming the same interest rate and annual savings amount? (Note: Round to two decimal places.) years, what would your nest egg be 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 exther the table of future value factors, the future value formula, or your financial calculator to calculate the value of this nest epg. (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.) Complete the following table by entering relevant values. Then use either the table of future value factors, the future value formuls, or your financial calculator to calculate the value of this nest 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 Intere 5502,596.88 $377,162,50 What wil this money in 25 years? (Note: Round to two deamal places) S $778,813.75 Again, your savings program five years earlier, what would your nest egg be worth, assuming that your funds were invested at this $543,537.50 higher in annual savings amount remains the same, and the funds are invested for years? (Note: Round to two decimal places)