Question

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When she was 20, Liz started saving $6,000 a year for retirement. Her goal is to reach $100,000 in savings by the time she’s 30. Her account earns 8% interest per year, compounded annually.


Liz have saved $100,000 by age 30. She’ll her goal by about .

Answer 1

Find below correct question:

When she was 20, liz started saving $6,000 a year for retirement. her goal is to reach & 100,00 in savings by the time she’s 30. her account earns 8% interest per year, compounded annually. liz (will/ won’t) have saved $100,000 by age 30. she’ll (exceed/ fall short of) her goal by about ($10,081/ $13,081/ $14,011)

liz won’t have saved $100,000 by age 30. she’ll fall short of her goal by about $13,081

Explanation:

First and foremost we need to know the worth of Liz's retirement savings when she is 30 using excel fv formula as follows:

=fv(rate,nper,-pmt,pv)

rate is the interest earned per year which is 8%

nper is the duration of savings which is 10 years

pmt is the amount of yearly savings which is $6,000

pv is the present worth of total savings which is not known

=fv(8%,10,-6000,0)=$86,919.37

Hence,Liz would be not be able to reach $100,000 at age 30.

Shortfall=$100,000-$86,919.37 =$ 13,080.63