Question

Saved Help Save & Exit David Bach talks about the "Latte Factor" in his book The Automatic Millionaire. He is referring to saving $5 a day by abstaining from drinking a Starbuck's coffee. If you invested this money over 40 years at 10%, how much would you save? Assume you invest the money each year. Multiple Choice O $1,825 O $73,000 873,000 $1,211,596

Answer 1

Number of days in a year = 365

Total amount saved in a year = 365*5 = $1,825

Calculate the future value as follows:

• 1 / f =FV(10%,40,-1825) Function Arguments х Rate 10% Nper 40 Pmt -1825 Pv Type * m = 0.1 = 40 = -1825 E = number E = number = 807731.4141 Returns the future value of an investment based on periodic, constant payments and a constant interest rate. Pmt is the payment made each period; it cannot change over the life of the investment. Formula result = 807731.4141 Help on this function Cancel

Future value is $807,731.