Today is Janet\'s 23rd birthday. Starting today, Janet plans to begin saving for

Question

Today is Janet's 23rd birthday. Starting today, Janet plans to begin saving for her retirement. Her plan is to contribute $3,000 to a brokerage account each year on her birthday. Her firs contribution will take place today. Her 42nd and final contribution will take place on her 64th birthday. Her aunt has decided to help Janet with her savings, which is why she gave Janet $10,000 today as a birthday present to help get her account started. Assume that the account has an expected annual return of 11 percent. How much will Janet expect to have in her account on her 65th birthday? Round your answer to 2 decimal places: for example 2345.25. Your Answer:

Explanation / Answer

Q2) I'm sloving 2 nd question before first Q.

Formula for future value of annuity is P[(1+r)t-1)/r]

Where,

P=Periodic Payments=$364

R=Interest Rate=9%

T=Compounding Period=5 Years

=364[(1.09)5-1]/ 0.09]

=2718.43

Question 1) As first payment of 10,000 is variable into account we just take fututre value of this and add it to the account.

10,000(1.11)42

=800,875.69

Now annuity calculation

=3000[(1.11)41-1/.11]

=1,940,481

Now adding both the values

800,875.69+1940481

2741356.49

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