Question

Your professor contributes $625 at the end of each month (including some matching funds from the college) to the CREF Stock Fund.

4. (4%) Assume that the economy has gotten better by the end of the first 15 years and, from that time on, the fund returns 8.75%, compounded monthly. Since the professor's salary has risen over the first 15 years, he can now contribute $1000 per month. At the end of the next 15 years, what will be the total amount of money in the professor's account? Please clearly indicate the values on your TVM solver screen. N=0 I%=0 PMT=0 FV=0 PY=1 C/Y=1 PMT:ENL BEGIN

Please show your all work if possible and label the answer. Thank you.

Answer 1

pre So 4% is intent rube For First 15 year & investment is $625 .: Your TUM calculahor Vale will be N 15x12 I: 4/12 (Don't press %) P. V = 0 PMT= -625 (in Negative as investul) (FV = Solve for Ful ply C/Y: 12 On Calculation, you will get FV = 153806.55 Now Fund Rohrm - 8. 75% & Contribution - 1000 For Next 15 year N=154 12 I 875/12 PV - - 153806.55 (Ansuer of Ev) PMT - - 1000 F.V - Solve hr FV Ply, oly - 12 FV = 938,729.80 Hence at the end of the period Professor will get $938 729.80