Question

Business Finance 344 Homework You plan to retire in 39 years. You are debating whether to deposit $69,931 into an account earning 9 percent annually today or waiting 14 years before making the deposit. How much more will be in the account when you retire in 39 years if you make the deposit today as opposed to waiting 14 years to make the first deposit

Answer 1

If you made the deposits now, you would have $1,412,109.77 more than waiting 14 years.

Step-by-step explanation:

Giving the following information:

Initial investment (PV)= $69,931

Interest rate (i)= 9%

Number of periods= 39 or 25

To calculate the future value, we need to use the following formula:

FV= PV*(1 + i)^n

Wait 14 years:

FV= 69,931*(1.09^25)

FV= $603,020.65

Deposit now:

FV= 69,931*(1.09^39)

FV= $2,015,130.42

If you made the deposits now, you would have $1,412,109.77 more than waiting 14 years.