Javier is currently paying $1,200 in interest on his credit cards annually. If, instead of paying...

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Javier is currently paying $1,200 in interest on his credit cards annually. If, instead of paying...

Javier is currently paying $1,200 in interest on his credit cards annually. If, instead of paying interest, he saved this amount every year, how much would he accumulate in a tax-deferred account earning 8 percent over 11, 16, or 21 years?

If, instead of paying interest, this amount was saved every year in a tax-deferred account earning 8 percent over 11 years, the amount accumulated would be $?

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Answer 1

Answer #1

We have to calculate the Future value of the sum Javier will have if he deposits a pmt of $1200 annually.

FV is calculated using the excel FV function:

11 years: =FV(8%,11,1200,,) = $19,974.5850

16 years: =FV(8%,16,1200,,) = $36,389.1397

21 years: =FV(8%,21,1200,,) = $60,507.5057

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Answer 2

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