Requirements -

1. How much out-of-pocket cash will you invest under the two options?

2. How much savings will you have accumulated at age under the two options?

3. Explain the results.

4. If you let the savings continue to grow for eight more years (with no further out-of-pocket investments), under each scenario, what will the investment be worth when you are age 62?

future value annuity factor table

future value factor table

present value annuity factor table

present value factor table

Assume you want to retire early at age 54 You plan to save using one of the following two strategies: (1) save $4.500 a year in an IRA beginning when you are 24 and ending when you are 54 (30 years) or (2) wait until you are 39 to start saving and then save $9.000 per year for the next 15 years. Assume you will earn the historic stock market average of 12% per year. (Click the icon to view the future value annuity factor table) (Click the icon to view the future value factor table) (Click the icon to view the present value annuity factor table.) (Click the icon to view the present value factor table) Read the requirements Requirement 1. How much out-of-pocket cash will you invest under the two options ? Calculate how much out-of-pocket cash you will Invest under the two options Option 1 16% Future Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 18% 20% Period 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Period 22.010 2020 2030 2040 2.050 2.080 2.080 2.100 2.120 2.140 2.180 2.180 2.200 Period 33.030 3.060 3.091 3.122 3.153 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 Period 4 4.0604.122 4.1844.243 4.310 4.375 4.506 4.641 4.779 4.921 5.086 5.215 5.388 Period 5 5.101 5.2045.309 5.410 5.526 5.637 5.887 6.105 8.353 6.610 6.877 7.154 7.442 Period 6 6.152 6.308 6.468 6.633 6.8026.975 7.336 7.716 8.115 8.536 8.977 9.442 9.930 Period 7 72147.4347.6627.898 8.1428.394 8.923 9.487 10.089 10.730 11.414 12.142 12.910 Period 8 8.2888.5838.892 0.2149.5499.897 10.637 11.438 12.300 13.233 14.240 15.327 18.499 Period 9 9.369 9.755 10.159 10.583 11.027 11.491 12.488 13.579 14.778 18.085 17.519 19.086 20.799 Period 10.462 10.950 11.48412.006 12.578 13.181 14.48715.937 17.549 19.337 21.321 23.521 25.959 10 Period 11.567 12. 169 12.80813.486 14.207 14.972 16.645 18.531 20.655 23.045 25.733 28.755 32.150 11 Period 12.68313.412 14.192 15.026 15.917 16.870 18.977 21.38424.133 27.271 30.850 34.931 39.581 12 Period 13.809 14.680 15.818 16.627 17.713 18.882 21.495 24.523 28.029 32.089 38.788 42.219 48.497 13 Period 14.94715.974 17.08618.292 19.599 21.015 24.21527.975 32.393 37.581 43.672 50.818 59.190 14 Period 16.097|17.29318.598 20.024 21.57923.270 27.152 31.772 37.280 43.842 51.880 60.985 72.035 15 Period 22.01924.297|26.870 29.778 33.066 36.786 45.762 57.275 72.052 91.025 115.380 148.628 188.688 20 Period 28.243|32.03036.450 41.646 47.727 54.865 73.106 98.347 133.334 181.871 249.214 342.603 471.981 25 Period 24.785 40.568|47.57556.085 68.43979.058 113.283164.494 241.333 356.787 530.312790.948 1.181.882 30 Period 48.88600.402 75.401 95.026120.800 154.762 259.057 442.593767.0911.342.0252.360.757 4. 163.2137.343.858 40 296 Future Value of $1 Periods 1% 3% 4% 5% 6% 8% 10% 12% 14% 16% Period 1 1.010 1.020 1.030 1.040 1.050 1.000 1.080 1.100 1.120 1.140 1.160 Period 2 1.020 1.040 1.061 1.082 1.103 1.124 1.100 1.210 1.254 1.300 1.346 Period 3 1.030 1.061 1.093 1.125 1.158 1.191 1.260 1.331 1.405 1.482 1.561 Period 4 1.041 1.0821.128 1.170 1.210 1.262 1.360 1.484 1.574 1.689 1.811 Period 5 1.051 1.104 1.159 1.217 1.278 1.338 1.469 1.611 1.762 1.925 2.100 Period 6 1.062 1.128 1.1941.265 1.340 1.419 1.587 1.772 1.9742.195 2.438 Period 7 1.072 1.149 1.2301.316 1.407 1.504 1.7141.949 2.211 2.502 2.826 Period 8 1.083 1.1721.2671.369 1.477 1.594 1.851 2.144 2.476 2.853 3.278 Period 9 1.094 1.195 1.305 1.423 1.551 1.6891.999 2.3582.7733.252 3.803 Period 1.105 1.219 1.344 1.480 1.629 1.791 2.150 2.594 3.108 3.707 4.411 10 18% 1.180 1.392 1.643 1.939 2.288 2.700 3.185 3.750 4.435 5.234 20% 1.200 1.440 1.728 2.074 2.488 2.988 3.583 4.300 5.180 6.192 1.110 1.243 1.384 1.539 1.710 1.898 2.332 2.853 3.479 4.228 5.117 8.178 7.430 1.1271.268 1.428 1.801 1.793 2.012 2.518 3.138 3.890 4.818 5.938 7.288 8.916 Period 11 Period 12 Period 13 Period 14 Period 15 1.1381.294 1.469 1.665 1.888 2.133 2.720 3.452 4.363 5.492 6.888 8.599 10.699 1.149 1.3191.513 1.732 1.980 2.261 2.937 3.797 4.8876.261 7.988 10.147 12.839 1.161 1.348 1.558 1.801 2.079 2.397 3.172 4.177 5.474 7.1389.268 11.974 15.407 1.220 1.480 1.800 2.191 2.653 3.207 4.8616.727 9.648 13.743 19.461 27.393 38.338 Period 20 Period 1.282 1.841 2.094 2.6883.388 4.2926.848 10.83517.000 26.462 40.874 62.689 | 95.396 1.348 1.811 2.427 3.243 4.322 5.743 10.06317.440 29.960 50.950 85.850 143.371 237.376 Period 30 Period 40 1.489 2.2083.262 4.801 7.040 10.286 21.725 45.250 93.051188.884 378.721 750.378 1.469.772 Present Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 10% 12% 14% 16% 18% 20% Period 0.990 0.980 0.8710.982 0.952 0.9430.626 0.909 0.893 0.877 0.862 0.8470.833 1 Period 1.9701.942 1.913 1.8881.859 1.833 1.783 1.736 1.8901.6471.8051.588 1.528 12 Period 2.9412.8842.8292.775 2.723 2.6732577 2.487 2.402 2.322 2.2482 174 2.106 13 Period 3.902 3.808 3.717 3.6303.5483.485 3.312 3.170 3.037 2.914 2.798 2.890 2.589 4 Period 4.853 4.713 4.580 4.452 4.329 4.212 3.9933.791 3.605 3.433 3.274 3.127 2.991 5 Period 5.795 5.601 5.417 5.2425.078 4.917 4.623 4 355 4 111 3.8893.885 3.498 3.326 6 Period 6.728 6.472 6.230 8.002 5.7885.5825.2064.888 4.584 4.288 4.0393.812 3.605 17 Period 7.652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.988 4.639| 4344 4.078 3.837 8 Period 8.5688.1627.788 7.4357.108 6.802 0.247 5.759 5.328 4.948 4.607 4.303 4.031 19 Period 9.471 8.983 8.530 8.1117.722 7.360 6.7106.145 5.650 5.216 4.833 4.494 4.192 10 Period 10.368 9.7879.253 8.780 8.308 7.8877.1396.495 5.938 5.453 5.0294.658 4327 Period 11.255 10.576 9.954 9.3858.883 8.384 7.5386.8146. 1945.660 5.1974.793 4.439 12 Period 12.13411.34810.635 9.988 9.3948.8537.904 7.1038.424 5.842 5.3424.9104533 13 Period 13.00412.108 11 296 10.563 9.899 9.295 8.244 7.3676.628 6.002 5.468 5.0084.811 14 Period 13.886 12.8411.93811.118 10.380 9.712 8.5597.8066.811 6.142 5.575 5.092 4.875 15 Period 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.5147.489 6.823 5.929 5.353 4.870 20 Period 22.023 19.523 17.41315.622 1409412.783 10.675 9.077 7.8436.873 6.097 5.487 4.948 25 Period 25.808|22.398 19.600 17.292 15.372 13.765 11 2580.4278.055) 7.003 6.177 5.517 4.979 Period 32.835 27.366 23.115 19.793 17.159 15.048 11.925 9.7798.244 7.105 6.233 5.548 4997 40 11 30 Present Value of 51 Periods 1% 29 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 0.990 0.980 0.971 0.962 0.952 0.943 0.928 0.909 0.893 0.877 0.882 0.847 0.833 1 Period 0.980 0.9610.943 0.925 0.9070.890 0.8570.825 0.797 0.769 0.7430.7180.694 2 Period 0.971 0.942 0.915 0.8890.864 0.840 0.794 0.751 0.712 0.875 0.841 0.609 0.579 3 Period 0.981 0.9240.888 0.8550.823 0.792 0.735 0.683 0.638 0.592 0.552 0.516 0.482 4 Period 0.951 0.9030.863 0.822 0.784 0.7470.681 0.621 0.567 0.519 0.478 0.437 0.402 5 Period 0.942 0.888 0.837 0.790 0.748 0.705 0.630 0.564 0.507 0.458 0.4100.370 0.335 6 Period 0.933 0.8710.813 0.750 0.711 0.865 0.583 0.513 0.462 0.400 0.354 0.3140.279 7 Period 0.923 0.853 0.789 0.731 0.677 0.6270.540 0.467 0.404 0.3510.305 0.2880.233 8 Period 0.914 0.8370.7680.7030.545 0.5920.500 0.424 0.361 0.308 0.263 0.225 0.194 9 Period 0.905 0.820 0.744 0.878 0.614 0.5580.463 0.388 0.322 0.270 0.227 0.1910.162 10 Period 0.898 0.8040.722 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.1950.162 0.135 11 Period 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.188 0.1370.112 12 Period 0.879 0.773 0.681 0.601 0.530 0.4690.368 0.290 0.229 0.182 0.145 0.116 0.093 13 Period 0.870 0.758 0.861 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 14 Period 0.861 0.7430.842 0.555 0.481 0.417 0.315 0.239 0.18 0.140 0.108 0.084 0.086 15 Period 0.820 0.673 0.554 0.45 0.377 0.312 0.215 0.149 0.1040.073 0.051 0.037 0.028 Period 0.780 0.610 0.478 0.375 0.295 0.233 0.14 0.092 0.05 0.038 0.024 0.0160.010 25 Period 0.742 0.552 0.412 0.308 0.231 0.1740.099 0.057 0.033 0.0200.012 0.007 0.004 30 Period 0.672 0.453 0.307 0.208 0.142 0.097 0.048 0.022 0.0110.005 0.003 0.001 0.001 40 20