Question
The interest rates given in the assignment are annual percentage rates. 1. Assume that starting on December 31, 2020, you deposit $2,800 in the bank
The interest rates given in the assignment are annual percentage rates.
1. Assume that starting on December 31, 2020, you deposit $2,800 in the bank and that you continue to deposit $2,800 every December 31st through December 31, 2050 (a total of 30 deposits). You are able to earn 4% interest per year. How much money will you have saved by December 31, 2050 after making the final deposit? (Hint: I recommend that you use the FV formula in Excel to solve this payment in arrears [sometimes called an ordinary annuity] problem. You can access the Help menu to learn how to use the FV function.)
2. Use the information from Question 1 except assume that you are able to earn 6% interest per year. How much money will you have saved by December 31, 2050?
3. Use the information from Question 1 except assume that you save every year through
December 31, 2060. How much money will you have saved by December 31, 2060?
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