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Homework answers / question archive / Suppose a recent college graduate's first job allows her to deposit $150 at the end of each month in a savings plan that earns 9%, compounded monthly
Suppose a recent college graduate's first job allows her to deposit $150 at the end of each month in a savings plan that earns 9%, compounded monthly. This savings plan continues for 15 years before new obligations make it impossible to continue.
How much money has accrued in the account at the end of the 15 years? (Round your answer to the nearest cent.)
$
If the accrued amount remains in the plan for the next 15 years without deposits or withdrawals, how much money will be in the account 30 years after the plan began? (Round your answer to the nearest cent.)
$
Computation of Amount accrued in the account at the end of the 15 years using FV Function in Excel:
=-fv(rate,nper,pmt,pv)
Here,
FV = Amount accrued in the account at the end of the 15 years or Future Value = ?
Rate = 9%/12
Nper = 15 years*12 months
PMT = $150
PV = 0
Substituting the values in formula:
=-fv(9%/12,15*12,150,0)
FV or Amount accrued in the account at the end of the 15 years or Future Value = $56,760.87
Computation of Amount in account 30 years after the plan began using FV Function in Excel:
=-fv(rate,nper,pmt,pv)
Here,
FV = Amount in account 30 years after the plan began or Future Value = ?
Rate = 9%/12
Nper = 15 years*12 months
PMT = 0
PV = $56,760.87
Substituting the values in formula:
=-fv(9%/12,15*12,0,-$56,760.87)
FV or Amount in account 30 years after the plan began or Future Value = $217,850.66
