Your client is 23 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $8,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 8% in the future. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent.

Question

Business

Maren Raymond

11 November, 22:26

Your client is 23 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $8,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 8% in the future. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent.

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Answers (1)

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Ramon Valentine · Answer 1

FV = $2,433,948.19

Explanation:

Giving the following information:

Your client is 23 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $8,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 8% in the future.

She will save until she is 65.

We need to use the following formula:

FV = {A*[ (1+i) ^n-1]}/i

A = annual deposit = 8000

n = 42

i=0.08

FV={8000[ (1.08^42) - 1]}/0.08 = $2,433,948.19