You have just made your first $6,000 contribution to your retirement account. As

Question

You have just made your first $6,000 contribution to your retirement account. Assume you earn an 13 percent rate of return and make no additional contributions. What will your account be worth when you retire in 35 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future Value: $____

What if you wait 10 years before contributing? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future Value: $____

Future Value: $____

What if you wait 10 years before contributing? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future Value: $____

Explanation / Answer

1. Future value, FV = P(1+i)n Where P=Present value, i=rate of return, n=no. of periods

= $6000(1+0.13)35

= $ 432,411.04

2. Future value if u waited 10 years before contributing = $6000(1+0.13)25

= $ 127,383.25

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