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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,
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 halue 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.) 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 higher interest rate, the annual savings amount remains the same, and the funds are invested for years? (Note: Round to two decimal places.)
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