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 $5,000.00 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 Year 2% 3% 6% 8% 9% 10% 5% 12.578 10 10.950 11.460 14.487 15.190 15.937 13.180 16.870 12 13.412 14.190 15.917 18.977 20.140 21.384 15 17.293 18.600 21.578 23.270 27.152 29.360 31.772 20 24.297 26.870 33.066 36.780 45.762 51.160 57.274 32.030 25 47.726 36.460 84.700 98.346 73.105 54.860 40.567 47.570 113.282 136.300 164.491 215.700 271.018 49.994 79.060 66.438 111.430 90.318 60.460 154.760 120.797 75.400 172.314 259.052 337.870 442.580 60.401 503 D 30 35 40 HCOISHURS UI30 Assignment: Chapter 14 Planning for Retirement 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.) $ years, what would your nest egg be 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.) S 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 either the table of future value factors, the future value formula, 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 2:54 PM 4/30/2022 Complete the following table by entering relevant values. Then use either the table of future value factors, the future value formula, 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 % 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 years? (Note: Round to two decimal higher interest rate, the annual savings amount remains the same, and the funds are invested for places.) Grade It Now Save & Continue Continue without saving