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Homework answers / question archive / 1) Thirty years ago, z Co set apart 300,00 in an account with an 8% annual return
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?
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
