1) If you begin saving $2,000/year at 5% for 9 years, what will these funds grow
ID: 2816630 • Letter: 1
Question
1) If you begin saving $2,000/year at 5% for 9 years, what will these funds grow to in this time period?
$11,970
$19,000
$22,054
$30,500
2) Investing $3,600/year for 30 years at 11% will make how much more money for you than if it were invested at 4% instead?
$389,672
$514,569
$722,459
$905,681
3) How much more at age 65 will somebody who saves $5,000/year have if they save from age 25 to 45 (20 years), than if they saved $5,000/year from age 35 to 65 (30 years), assuming they can safely get a return of 11% per year all the way to age 65 for both scenarios (which you will learn how to get later in this course!!)?
$798.452
$1,205,782
$1,593,006
$1,802,991
Explanation / Answer
1.
=2000/0.05*(1.05^9-1)=22054 Option C
2.
=3600/0.11*(1.11^30-1)=716475
=3600/0.04*(1.04^30-1)=201906
Difference=514569 Option B
3.
25-45: =5000/0.11*(1.11^20-1)*1.11^20=2588116
35-65: =5000/0 11*(1.11^30-1)=995110
Differebce=1593006
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