DB post: Answers to these questions are related to your actual age (28 years & 11...
DB post:
Answers to these questions are related to your actual age (28 years & 11 months). Assume you drink one coffee per day, 5 days a week. Assume coffee price is $4.00. That makes it $20 per week and $80 per month. Assume you can invest $80 per month in the stock market and assume you can earn 1 % per month on your stock investment or 12 % per year.
A) At your retirement, when you are 65 years old, how much you will have in your retirement account if you switch from coffee drinking to investing in the stock market?
Homework Answers
a). FVA = Annuity x [{(1 + r)n - 1} / r]
= $80 x [{(1 + 0.01){(36 x 12) + 1} - 1} / 0.01]
= $80 x [73.3284 / 0.01] = $80 x 7,332.84 = $586,627.29
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