QUESTION 3 THIS QUESTION SHOULD BE ANSWERED IN AN EXCEL FILE. WHEN YOU HAVE ANSW

Question

QUESTION 3 THIS QUESTION SHOULD BE ANSWERED IN AN EXCEL FILE. WHEN YOU HAVE ANSWERED THE QUESTION, NAME YOUR FILE YOUR LAST NAME 83 AND UPLOAD IT TO You are saving for retirement in 40 years. You deposit $20,000 in a bank account today that pays 3% interest, compounded semiannually. You leave those funds on deposit until you retire. You also contribute $5,000 a year to a pension plan for 20 years and then you stop making contributions to the fund. You leave your money in the pension fund until you retire. The pension plan grows at a rate of 5% a year. 3) Attach Fie Cick Sove and Subwit to sqe and ssCick Se Al Ansers to sque all anwers Save All Answers MacBook Pro 7 8

Explanation / Answer

Bank deposit

Initial deposit = 20000

Interest = 1.5% semiannual

Period =40*2 = 80 semiannual periods

Amount of bank deposit = 20000* (F/P, 1.5%,80)

= 20000* 3.291

= $65,820

Pension Fund

Annuity = 5000 p.a

Period = 20

Rate = 5%

FV of annuity at the end of year 20 = 5000* (F/A, 5%, 20)

= 5000* 33.066

= $165,330

FV of the amount after another 20 years ie: on retirement = 165330* (F/P, 5%, 20)

= 165330* 2.653

= 438620.49

Total amount on retirement = = 438620.49+ 65820

= $504,440.49

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