Question

Socolate this astot Seth are both married, working adults. They both plan for retirement and consider the $6,000 annual contribution a must der Beth's savings. She began working at age 20 and began making an annual contribution to her IRA of $6,000 each year untilage 32 (12 con rk to have chan and be a stay at home mom. She left her IRA invested and plans to begin drawing from her RA when she 65 d contributing to his IRA at age 32 The first 12 years of his working career, he used his discretionary income to buy a home, upgrade the family cars is golfing hobby. At age 32, he made his first $6,000 contribution to an IRA and contributed $6,000 every year up until age 65 33 contbons) - make withdrawals from his IRA ounts grow at an 8% annual rate. Do not consider any tax or inflation effect e paragraph summary in which you: a chart summarizing the details of the investment for both larry and Beth the results in terms of time value of money (Hint: discuss why one person was able to save a great deal more that the other) an submit a Word document or use the Excel templaw provided wnload a template for this homework assignment Browse My Computer Browse Content Collection to complete this assessment

please give answer

Answer 1

The value of investment for first person would be 1,558,796.38 at the end of 65 year and value of investment for second person would be 945,760.02

The information is not properly visible hence unable to include name of the person in response.

It is assumed that investment is made at the end of period and accordingly interest on same will be considered in next period only.

The value of investment indicates the power of compounding over a period of time. The power of compounding is greater when investment time period is higher. This also indicate that saving initiated at young age yields higher interest.

Though first person makes only 12 contribution but as he starts early from 20 th year, the first contribution made at end of 20th year get compounding interest for the period of 45 years, the contribution made in 21st year would get compounding interest of 44 years & so on.

On other hand the person initiating investment at 32 year age, his first contribution made on 32nd year would get compounding interest for 33 years & so on.

Value of Investment for first person who started investing from 20th Year
Age	Opening Balance	Deposit	Interest	Closing Balance
20	-	6,000.00	-	6,000.00
21	6,000.00	6,000.00	480.00	12,480.00
22	12,480.00	6,000.00	998.40	19,478.40
23	19,478.40	6,000.00	1,558.27	27,036.67
24	27,036.67	6,000.00	2,162.93	35,199.61
25	35,199.61	6,000.00	2,815.97	44,015.57
26	44,015.57	6,000.00	3,521.25	53,536.82
27	53,536.82	6,000.00	4,282.95	63,819.77
28	63,819.77	6,000.00	5,105.58	74,925.35
29	74,925.35	6,000.00	5,994.03	86,919.37
30	86,919.37	6,000.00	6,953.55	99,872.92
31	99,872.92	6,000.00	7,989.83	113,862.76
32	113,862.76		9,109.02	122,971.78
33	122,971.78		9,837.74	132,809.52
34	132,809.52		10,624.76	143,434.28
35	143,434.28		11,474.74	154,909.03
36	154,909.03		12,392.72	167,301.75
37	167,301.75		13,384.14	180,685.89
38	180,685.89		14,454.87	195,140.76
39	195,140.76		15,611.26	210,752.02
40	210,752.02		16,860.16	227,612.18
41	227,612.18		18,208.97	245,821.16
42	245,821.16		19,665.69	265,486.85
43	265,486.85		21,238.95	286,725.80
44	286,725.80		22,938.06	309,663.86
45	309,663.86		24,773.11	334,436.97
46	334,436.97		26,754.96	361,191.93
47	361,191.93		28,895.35	390,087.28
48	390,087.28		31,206.98	421,294.26
49	421,294.26		33,703.54	454,997.80
50	454,997.80		36,399.82	491,397.63
51	491,397.63		39,311.81	530,709.44
52	530,709.44		42,456.76	573,166.19
53	573,166.19		45,853.30	619,019.49
54	619,019.49		49,521.56	668,541.05
55	668,541.05		53,483.28	722,024.33
56	722,024.33		57,761.95	779,786.28
57	779,786.28		62,382.90	842,169.18
58	842,169.18		67,373.53	909,542.72
59	909,542.72		72,763.42	982,306.13
60	982,306.13		78,584.49	1,060,890.62
61	1,060,890.62		84,871.25	1,145,761.87
62	1,145,761.87		91,660.95	1,237,422.82
63	1,237,422.82		98,993.83	1,336,416.65
64	1,336,416.65		106,913.33	1,443,329.98
65	1,443,329.98		115,466.40	1,558,796.38

Value of Investment for first person who started investing from 32nd Year
Age	Opening Balance	Deposit	Interest	Closing Balance
20
21
22
23
24
25
26
27
28
29
30
31
32	-	6,000.00	-	6,000.00
33	6,000.00	6,000.00	480.00	12,480.00
34	12,480.00	6,000.00	998.40	19,478.40
35	19,478.40	6,000.00	1,558.27	27,036.67
36	27,036.67	6,000.00	2,162.93	35,199.61
37	35,199.61	6,000.00	2,815.97	44,015.57
38	44,015.57	6,000.00	3,521.25	53,536.82
39	53,536.82	6,000.00	4,282.95	63,819.77
40	63,819.77	6,000.00	5,105.58	74,925.35
41	74,925.35	6,000.00	5,994.03	86,919.37
42	86,919.37	6,000.00	6,953.55	99,872.92
43	99,872.92	6,000.00	7,989.83	113,862.76
44	113,862.76	6,000.00	9,109.02	128,971.78
45	128,971.78	6,000.00	10,317.74	145,289.52
46	145,289.52	6,000.00	11,623.16	162,912.68
47	162,912.68	6,000.00	13,033.01	181,945.70
48	181,945.70	6,000.00	14,555.66	202,501.35
49	202,501.35	6,000.00	16,200.11	224,701.46
50	224,701.46	6,000.00	17,976.12	248,677.58
51	248,677.58	6,000.00	19,894.21	274,571.79
52	274,571.79	6,000.00	21,965.74	302,537.53
53	302,537.53	6,000.00	24,203.00	332,740.53
54	332,740.53	6,000.00	26,619.24	365,359.77
55	365,359.77	6,000.00	29,228.78	400,588.56
56	400,588.56	6,000.00	32,047.08	438,635.64
57	438,635.64	6,000.00	35,090.85	479,726.49
58	479,726.49	6,000.00	38,378.12	524,104.61
59	524,104.61	6,000.00	41,928.37	572,032.98
60	572,032.98	6,000.00	45,762.64	623,795.62
61	623,795.62	6,000.00	49,903.65	679,699.27
62	679,699.27	6,000.00	54,375.94	740,075.21
63	740,075.21	6,000.00	59,206.02	805,281.22
64	805,281.22	6,000.00	64,422.50	875,703.72
65	875,703.72		70,056.30	945,760.02