Question
Lindsay wants to make sure that she is financially sound in 30 years, so she plans to invest the same amount into a retirement account
Lindsay wants to make sure that she is financially sound in 30 years, so she plans to invest the same amount into a retirement account at the end of every year for the next 30 years. Your task is to construct a data table that will show Lindsay the balance of her retirement account for various levels of annual investment and return. Since Lindsay invests at the end of the year, there is no interest earned on the contribution for the year in which she contributes.
For example, if Lindsay invests $5000.00 a year with a return of 6%, her ending balance for the first year is $5000.00 (no interest), for the second year its 10,300.00 (10,000.00 + 6.0% of $5,000.00), for the third year its $15,918 ($ 15,300.00 + 6% of 10,300), and so on. Which adds up to an estimated $395,290.93 after 30 years.
Develop a two-way table which shows Lindsays ending balance after 30 years, for annual investment amounts of $2,500 to $25,000 in increments of $1,250 and for returns of 0 to 15% in increments of 1%.
Note 1: If you setup your two-way table correctly, the entry for $5000.00 annual investment and 6% interest should equal $395,290.93, and the entry for $5000.00 annual investment and 0% interest should equal $150,000.
Note 2: One way to implement the spreadsheet model is to use two parameters of Annual Investment and Annual Return, and develop a model for Year 1 Return on Investment and Year 1 Ending Balance. Then, you can use Year 1 Return on Investment and Year 1 Ending Balance, as well as Annual Investment and Annual Return to calculate Year 2 Return on Investment and Year 2 Ending Balance, and so on, until you can find Year 30 Return on Investment and Year 30 Ending Balance. Afterward, you can use the the Year 30 Ending Balance to develop your two-way data table.
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