Question
A) Individual 1 decided to invest $2500 at the end of each year for the next 10 years, then will just let the amount compound
A) Individual 1 decided to invest $2500 at the end of each year for the next 10 years, then will just let the amount compound for 30 additional years. Individual 2, has a different investment program & will invest nothing for the next 10 years, but will invest $2500 per year (at the end of each year) for the following 30 years. If we assume a 6% percent rate of return, compounded annually, which investment program will be worth more 40 years from now?
B) Using your results elaborate on the power of compounding and how it impacts savings in the long run. What lessons can out draw from this exercise about personal and retirement financial planning?
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