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.

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Business

Demarion Solis

19 March, 19:10

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.

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Answers (1)

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Tristan Underwood · Answer 1

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