Question

Your client is 23 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $8,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 8% in the future. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent.

Answer 1

Answer:

FV= $2,433,948.19

Explanation:

Giving the following information:

Your client is 23 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $8,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 8% in the future.

She will save until she is 65.

We need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit= 8000

n= 42

i=0.08

FV={8000[(1.08^42)-1]}/0.08= $2,433,948.19