Question

The Story of Ben and Arthur- Both save $500 per month at 11% compounded monthly. Ben starts at age 19 and stops at age 26, while Arthur starts at age 27 and stops at age 65.

Answer 1

Results are below.

Explanation:

It is not clear what the question is. But, I will assume that we need to calculate the future value of each investment at age 65.

First, we need to calculate the future value of the monthly deposit made by Ben. We will use the following formula:

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

A= monthly deposit= 500

Interest rate (i)= 0.11/12= 0.0092

Number of months (n)= (26 - 19)*12= 84

FV= {500*[(1.0092^84) - 1]} / 0.0092

FV= $62,944.74

Now, the future value of the investment of Ben at age 65:

FV= PV*(1 + i)^n

n= (65 - 26)*12= 468 months

FV= 62,944.74*(1.0092^468)

FV= $4,574,131.31

Finally, the future value of the investment for Arthur:

i= 0.0092

n= (65 - 27)*12= 456

A= 500

FV= {500*[(1.0092^456) - 1]} / 0.0092

FV= $3,484,032.07