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6. Amy is 25 years old and has attended some retirement planning seminars at work.
Knowing she should start thinking about retirement savings early, Amy plans to invest in
an annuity earning 5% interest compounded annually. She plans to save $100 from her
monthly paychecks so that she can make annual payments of $1,200 into the annuity.
Use the TVM calculator to determine the future value of the investment after 35 years.
Variable
N
1%
PV
PMT
FV
A
PIY
C/Y
Definition of Variable
number of compounding periods between the time of
investment and the time of retirement
annual interest rate (as a percent)
principal, or present value
amount of each regular payment
future value, or value of the investment at maturity
number of payments per year (usually the same as
the number of compounding periods per year, C/Y
number of compounding periods per year
Value in This
Situation