You have just made your first $5,800 contribution to your retirement account. As

Question

You have just made your first $5,800 contribution to your retirement account. Assume you earn an 12 percent rate of return and make no additional contributions.

What will your account be worth when you retire in 37 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

What if you wait 10 years before contributing? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

You have just made your first $5,800 contribution to your retirement account. Assume you earn an 12 percent rate of return and make no additional contributions.

Explanation / Answer

1)Future value = Cash flow * FVAF@12%,37years

                    =      5800 * 66.23                        [Fro annuity table]

                    = $ 384144.69

2)I f you wait for 10 years . Amount will be invested for 27 years

Future value = Cash flow * FVAF@ 12 %27years

                  = 5800 * 21.3249

                 = $ 123,684.31

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