Question

A 20-year-old student wants to save $3 a day for her retirement. Every day she places $3 in a drawer. At the end of each year, she invests the accumulated savings ($1,095) in a brokerage account with an expected annual return of 12%. How much money will she have when she is 65 years old? (We did this part in class)

Answer 1

Answer:

The money she will be having when she is 65 years old is $1487261.89.

Explanation:

Annual savings = $3×365

                           = $1,095

Savings at the end of 65 years = $1,095×[(1 + 12%)^(65-20) - 1] / 12%  

                                                    = $1487261.89

Therefore, the money she will be having when she is 65 years old is $1487261.89.