I have attempted some of the questions within the excel sheet; however, I'm not sure if I'm on the right track. Can you please provide any assistance/formulas you can to assist?
Alfred has been advised that on each pay day he should pay himself first by depositing some part of his paycheck in a fund before spending any of the paychecks. He has resolved to invest $280 a month into a savings fund. To simplify calculations, consider each month as having exactly 28 days meaning that there will be 13 months per year, exactly 52 weeks per year, exactly 4 weeks per month and 364 days per year (52*7). How much will Alfred accumulate in 40 years for each of the following investment alternatives?
1. Deposit $280 once a month into a fund with an APR of 3.02% with interest compounded monthly (13 times per year)
2. Deposit $70 once a week into a fund with an APR of 2.67% with interest compounded weekly (52 times per year)
3. Deposit $70 once a week into a fund with an APR of 2.66% with interest compounded Daily (364 times per year)
Solution depicts the steps to find the accumulated amount in the given cases.
Time value of money: Accumulate future sums; create a retirement fund
Deposits to accumulate future sums. For each of the cases shown in the following table, determine the amount of equal, annual, end of year deposits necessary to accumulate the given sum at the end of specified period, assuming stated annual interest rate.
Case Sum to be Accumulation
Accumulated period (years) Interest Rate
A $5000 3 12%
B 100,000 20 7
C 30,000 8 10
D 15,000 12 8
Creating a retirement fund. To supplement your planned retirement in exactly 42 years, you estimate that you need to accumulate $220,000 by the end of 42 years from today. You plan to make equal, end-of-year deposits into an account paying 8% annual interest.
a. How large must the annual deposits be to create $220,000 fund by the end of 42 years?
b. If you can afford to deposit $600 per year into the account, how much will you have accumulated by the end of forty-second year?