Question

Time value Personal Finance Problem You can depost $14,000 into an account paying 7% annual Interest ither today or exactly 5 years trom How much beter off wa you be atthe end of 40 years today you decide to make the inišial depesit today rather than 5 years from today? The future value at the end of 40 years if you deposit S14 000 at 7% nettre you invest the $14,000 ow instead of walting for 5 years to make the investment, you would be better ofl by today iss[] (Round to the nearest dolar) value atthe end of 40 years if you deposit $14 000 at 7% 5 years born today is SC] Round to the nearest dolar ) sRound to the nearest dola)

Answer 1

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

a.A=$14000*(1.07)^40

=$14000*14.97445784

=$209,642(Approx).

b.A=$14000*(1.07)^35

=$14000*10.67658148

=$149,472(Approx).

c.Excess amount=(209642-149472)

=$60170.