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You invest $3163 at the beginning of every year and your friend invests $3163 at the end of every year
You invest $3163 at the beginning of every year and your friend invests $3163 at the end of every year. If you both earn an annual rate of return of 11% - how much will you have in your account after 20 years? how much will you friend have?
Expert Solution
a-1. Computation of Accumulated Amount after 20 years using FV Function in Excel:
=-fv(rate,nper,pmtpv,type)
Here,
FV = Accumulated Amount or Future Value = ?
Rate = 11%
Nper = 20 Years
PMT = $3,163
PV = 0
Type = 1
Substituting the values in formula:
=-fv(11%,20,3163,0,1)
FV or Future Value = $225,411.65
1-a. Computation of Accumulated Amount in your friend's account after 20 years using FV Function in Excel:
=-fv(rate,nper,pmt,pv,type)
Here,
FV = Accumulated Amount or Future Value = ?
Rate = 11%
Nper = 20 Years
PMT = $3,163
PV = 0
Type = 0
Substituting the values in formula:
=-fv(11%,20,3163,0,0)
FV or Future Value = $203,073.56
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