If a person invests $2,400 each year into a retirement account that pays 4%, how

Question

If a person invests $2,400 each year into a retirement account that pays 4%, how much will the account be worth in 30 years?

After 30 years they stop making additions to the account but they allow it to grow for an additional 5 years. How much would it be worth in an additional 5 years?

If they continued investing $2,400 each year for an additional 5 years how much would the account be worth?

Please include a properly setup Excel spreadsheet that has a tab labeled Q1..Q5 for each problem. Also, use cell referencing. Thanks!

Explanation / Answer

If a person invests $2,400 each year into a retirement account that pays 4%, how much will the account be worth in 30 years?

FV= 2400*FVAIF(4%, 30 years) =2400*56.0849 =134603.76

After 30 years they stop making additions to the account but they allow it to grow for an additional 5 years. How much would it be worth in an additional 5 years?

FV1 = 134603.76*(1+0.04)^5 = 163766.0553

If they continued investing $2,400 each year for an additional 5 years how much would the account be worth?

FV2 = 2400*FVIFA(4%, 35 years) =2400*73.6522 =176765.3

Q1

134603.8506

Q2

Q3

year amount Future worth 1 2400 7484.763485 2 2400 7196.887966 3 2400 6920.084583 4 2400 6653.927483 5 2400 6398.007196 6 2400 6151.929996 7 2400 5915.317304 8 2400 5687.8051 9 2400 5469.043365 10 2400 5258.695543 11 2400 5056.438022 12 2400 4861.959637 13 2400 4674.961189 14 2400 4495.15499 15 2400 4322.264413 16 2400 4156.023474 17 2400 3996.176418 18 2400 3842.477325 19 2400 3694.689735 20 2400 3552.586284 21 2400 3415.94835 22 2400 3284.565721 23 2400 3158.23627 24 2400 3036.765644 25 2400 2919.966966 26 2400 2807.660544 27 2400 2699.6736 28 2400 2595.84 29 2400 2496 30 2400 2400 Worth=

134603.8506

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