PROBLEM 2: You are concerned about whether your savings and investments are adequate to meet your retirement needs. Last year you saved $1,500 and believe you can increase that at 5% per annum for the next 15 years. Assuming you can achieve an 8% return on your investment, how much would you accumulate by the end of the 15th year? EXCEL MATH YOUR NOTATION FORMULA INPUTS PV A Year 1 = A(1 + g) = g In Excel Notation PV (A,r,g,n) Formula Present Value of $1,500 Growing Annuity (5% per annum) (1 + g) 1.00 0 1.000 1- 1- 1-Excel Notation PV (A,r,g,n) Formula Present Value of $1,500 Growing Annuity (5% per annum) (1+ g) 1.00 0 1.000 1. 1- 1- (1 + r) 0 1.00 0 a. Present Value 1.000 A(1 + g) = r- g 0.0% b. Future Value Future Value of $1,500 Growing Annuity (5% per annum) for 15 years. PV X 1.000PV (A, r,g,n) Present Value of $1,500 Growing Annuity (5% per annum) (1+ g) 1.00 0 1.000 1- 1. 1- (1 + r) 0 1.00 0 A(1 + g) = 1.000 r- g 0.0% Future Value of $1,500 Growing Annuity (5% per annum) for 15 years. X 1.000 HOW A NORMAL PERSON WOUL Year 1 Ye