Question

If Sharon has a surplus of $4400 per year and chooses to save that surplus for her future, needs, how much wealth will her surplus savings be worth after 25 years if she can earn a 11% rate of return?

Answer 1

Her surplus savings will be worth $503,418 after 25 years.

Step-by-step explanation:

In this question we are told than Sharon if Sharon saves 4400 each year for 25 years how much money will she have at the end of 25 years if she earns 11% compounded interest. To solve this question we will need a financial calculator.

The present value of her investment is 0. She contributes 4400 each year so her payments are 4400, the number of years are 25, and the interest rate is 11% so we will input these values in a financial calculator and find the future value of her savings.

PV=0

PMT=-4400

I=11

N=25

Compute FV=503,418