1) Thirty years ago, z Co set apart 300,00 in an account with an 8% annual return

Accounting Dec 06, 2020

1) Thirty years ago, z Co set apart 300,00 in an account with an 8% annual return. What is that amount worth today?

2) After completing her residency, an obstetrician plans to invest $9,000 per year at the end of each year into a low-risk retirement account. She expects to earn 6 percent for thirty-five years. What will her retirement account be worth at the end of those thirty-five years?

Expert Solution

1) Computation of the total amount worth today:-

FV = PV*(1+rate)^n

= 30,000*(1+8%)^30

= 30,000*10.0627

= 301,879.71

2) We can calculate the future value by using the following formula in excel:-

=fv(rate,nper,-pmt,pv)

Here,

FV = Future value

Rate = 6%

Nper = 35 periods

Pmt = $9,000

PV = $0

Substituting the values in formula:

= fv(6%,35,-9000,0)

= $1,002,913.02

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote