Lindsay is 25 years old and has a new job in web development. She wants to make

Question

Lindsay is 25 years old and has a new job in web development. She wants to make sure that she is financially sound by the age of 55, so she plans to invest the same amount into a retirement account at the end of every year for the next 30 years.

Lindsay is 25 years old and has a new job in web development. She wants to make sure that she is financially sound by the age of 55, so she plans to invest the same amount into a retirement account at the end of every year for the next 30 years.

(a) Construct a data table in Excel that will show Lindsay the balance of her retirement account for various levels of annual investment and return. If Lindsay invests $10,000 at return of 6%, what would be the balance at the end of the 30th year? Note that because Lindsay invests at the end of the year, there is no interest earned on the contribution for the year in which she contributes. Round your answer to a whole dollar amount. $ (b) Develop a two-way table for annual investment amounts of $5,000 to $20,000 in increments of $1,000 and for returns of 0% to 12% in increments of 1%. From the 2-way table, what are the minimum annual investments Lindsay’s must contribute for annual rates ranging from 6% to 11%, if she wants to accrue a final payout of at least $1 million? Note that because Lindsay invests at the end of the year, there is no interest earned on the contribution for the year in which she contributes. Annual Return Minimum Annual Investment 6% $ 7% $ 8% $ 9% $ 10% $ 11% $

Explanation / Answer

ANSWER (A):

Investment amount at the end of 30 years will be

Investment amount after 30 years =amount of investment * (interest rate )^no of years of investment

=10,000 * (1.06)^ 30 years

=10,000 * 5.74349

=57435

Conclusion: The balance on the account at the end of 30th year after earning interest of 6% will be 57345

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