Given: i = 8% per year, deposit scenarios shown in Figure 2.23. Find: F when you are 65. F6s A Option 1: Early Savings Plan 0 1 2 3 4 5 6 7 8 9 10 44 Years $2,000 F65 Option 2: Deferred Savings Plan 0 1 2 3 4 5 6 7 8 9 1011 12 Years $2,000
Given: i = 8% per year, deposit scenarios shown in Figure 2.23. Find: F when you are 65. F6s A Option 1: Early Savings Plan 0 1 2 3 4 5 6 7 8 9 10 44 Years $2,000 F65 Option 2: Deferred Savings Plan 0 1 2 3 4 5 6 7 8 9 1011 12 Years $2,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Consider the following two savings plans that you think about starting at the age of21:
• Option 1: Save $2,000 a year for 10 years. At the end of 10 years, make no
further investments, but invest the amount accumulated at the end of every 10 years until you reach the age of 65. (Assume that the first deposit will be made when you are 22.)
• Option 2: Do nothing for the first 10 years. Start saving $2,000 a year every year thereafter until you reach the age of 65. (Assume that the first deposit will be made when you turn 32.)
If you were able to invest your money at 8% over the planning horizon, which plan would result in more money saved by the time you are 65? (See Figure 2.23.)
Transcribed Image Text:Given: i = 8% per year, deposit scenarios shown in Figure 2.23.
Find: F when you are 65.
F6s A
Option 1: Early Savings Plan
0 1 2 3 4 5 6 7 8 9 10
44
Years
$2,000
F65
Option 2: Deferred Savings Plan
0 1 2 3 4 5 6 7 8 9 1011 12
Years
$2,000
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