How much could you save for retirement if you chose to invest the money you spend on Starbucks coffee in one year? Assume you buy one venti cup of caffe latte for $4.40 each weekday for 50 weeks and can invest the total amount in a mutual fund earning 5% compounded annually for 30 years. (Use the Table 12.1 provided.)

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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How much could you save for retirement if you chose to invest the money you spend on Starbucks coffee in one year? Assume you buy one venti cup of caffe latte for $4.40 each weekday for 50 weeks and can invest the total amount in a mutual fund earning 5% compounded annually for 30 years. (Use the Table 12.1 provided.) (Round your answer to two decimal places.)

Amount saved for retirement  
TABLE 12.1
Future value of $1 at compound interest
Perlod
1%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
1.0200
1.07 00
1.0900
1.1000
1
1.0100
1.0150
1.0300
1.0400
1.0500
1.0600
1.0800
1.0201
1.0302
1.0404
1.0609
1.0816
1.1025
1.1236
1.1449
1.1664
1.1881
1.2100
1.0303
1.0457
1.0612
1.0927
1.1249
1.1576
1.1910
1.2250
1.2597
1.2950
1.3310
4
1.0406
1.0614
1.0824
1.1255
1.1699
1.2155
1.2625
1.3108
1.3605
1.4116
1.4641
1.0510
1.0773
1.1041
1.1593
1.2167
1.2763
1.3382
1.4026
1.4693
1.5386
1.6105
1.0615
1.0934
1.1262
1.1941
1.2653
1.3401
1.4185
1.5007
1.5869
1.6771
1.7716
1.0721
1.1098
1.1487
1.2299
1.3159
1.4071
1.5036
1.6058
1.7138
1.8280
1.9487
8.
1.0829
1.1265
1.1717
1.2668
1.3686
1.4775
1.5938
1.7182
1.8509
1.9926
2.1436
9.
1.0937
1.1434
1.1951
1.3048
1.4233
1.5513
1.6895
1.8385
1.9990
2.1719
2.3579
10
1.1046
1.1605
1.2190
1.3439
1.4802
1.6289
1.7908
1.9672
2.1589
2.3674
2.5937
11
1.1157
1.1780
1.2434
1.3842
1.5395
1.7103
1.8983
2.1049
2.3316
2.5804
2.8531
12
1.1268
1.1960
1.2682
1.4258
1.6010
1.7959
2.0122
2.2522
2.5182
2.8127
3.1384
13
1.1381
1.2135
1.2936
1.4685
1.6651
1.8856
2.1329
2.4098
2.7196
3.0658
3.4523
14
1.1495
1.2318
1.3195
1.5126
1.7317
1.9799
2.2609
2.5785
2.9372
3.3417
3.7975
15
1.1610
1.2502
1.3459
1.5580
1.8009
2.0789
2.3966
2.7590
3.1722
3.6425
4.1772
16
1.1726
1.2690
1.3728
1.6047
1.87 30
2.1829
2.5404
2.9522
3.4259
3.9703
4.5950
17
1.1843
1.2880
1.4002
1.6528
1.9479
2.2920
2.6928
3.1588
3.7000
4.3276
5.0545
18
1.1961
1.3073
1.4282
1.7024
2.0258
2.4066
2.8543
3.3799
3.9960
4.7171
5.5599
19
1.2081
1.3270
1.4568
1.7535
2.1068
2.5270
3.0256
3.6165
4.3157
5.1417
6.1159
20
1.2202
1.3469
1.4859
1.8061
2.1911
2.6533
3.2071
3.8697
4.6610
5.6044
6.7275
21
1.2324
1.3671
1.5157
1.8603
2.2788
2.7860
3.3996
4.1406
5.0338
6.1088
7.4002
22
1.2447
1.3876
1.5460
1.9161
2.3699
2.9253
3.6035
4.4304
5.4365
6.6586
8.1403
23
1.2572
1.4084
1.5769
1.9736
2.4647
3.07 15
3.8197
4.7405
5.8715
7.2579
8.9543
24
1.2697
1.4295
1.6084
2.0328
2.5633
3.2251
4.0489
5.0724
6.3412
7.9111
9.8497
25
1.2824
1.4510
1.6406
2.0938
2.6658
3.3864
4.2919
5.4274
6.8485
8.6231
10.8347
26
1.2953
1.4727
1.6734
2.1566
2.7725
3.5557
4.5494
5.8074
7.3964
9.3992
11.9182
27
1.3082
1.4948
1.7069
2.2213
2.8834
3.7335
4.8223
6.2139
7.9881
10.2451
13.1100
28
1.3213
1.5172
1.7410
2.2879
2.9987
3.9201
5.1117
6.6488
8.6271
11.1672
14.4210
29
1.3345
1.5400
1.7758
2.3566
3.1187
4.1161
5.4184
7.1143
9.3173
12.1722
15.8631
30
1.3478
1.5631
1.8114
2.4273
3.2434
4.3219
5.7435
7.6123
10.0627
13.2677
17.4494
Note: For more detalled tables, see your reference booklet, the Business Math Handbook.
CO
Transcribed Image Text:TABLE 12.1 Future value of $1 at compound interest Perlod 1% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 1.0200 1.07 00 1.0900 1.1000 1 1.0100 1.0150 1.0300 1.0400 1.0500 1.0600 1.0800 1.0201 1.0302 1.0404 1.0609 1.0816 1.1025 1.1236 1.1449 1.1664 1.1881 1.2100 1.0303 1.0457 1.0612 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 4 1.0406 1.0614 1.0824 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.0510 1.0773 1.1041 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.0615 1.0934 1.1262 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.0721 1.1098 1.1487 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 8. 1.0829 1.1265 1.1717 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 9. 1.0937 1.1434 1.1951 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 10 1.1046 1.1605 1.2190 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 11 1.1157 1.1780 1.2434 1.3842 1.5395 1.7103 1.8983 2.1049 2.3316 2.5804 2.8531 12 1.1268 1.1960 1.2682 1.4258 1.6010 1.7959 2.0122 2.2522 2.5182 2.8127 3.1384 13 1.1381 1.2135 1.2936 1.4685 1.6651 1.8856 2.1329 2.4098 2.7196 3.0658 3.4523 14 1.1495 1.2318 1.3195 1.5126 1.7317 1.9799 2.2609 2.5785 2.9372 3.3417 3.7975 15 1.1610 1.2502 1.3459 1.5580 1.8009 2.0789 2.3966 2.7590 3.1722 3.6425 4.1772 16 1.1726 1.2690 1.3728 1.6047 1.87 30 2.1829 2.5404 2.9522 3.4259 3.9703 4.5950 17 1.1843 1.2880 1.4002 1.6528 1.9479 2.2920 2.6928 3.1588 3.7000 4.3276 5.0545 18 1.1961 1.3073 1.4282 1.7024 2.0258 2.4066 2.8543 3.3799 3.9960 4.7171 5.5599 19 1.2081 1.3270 1.4568 1.7535 2.1068 2.5270 3.0256 3.6165 4.3157 5.1417 6.1159 20 1.2202 1.3469 1.4859 1.8061 2.1911 2.6533 3.2071 3.8697 4.6610 5.6044 6.7275 21 1.2324 1.3671 1.5157 1.8603 2.2788 2.7860 3.3996 4.1406 5.0338 6.1088 7.4002 22 1.2447 1.3876 1.5460 1.9161 2.3699 2.9253 3.6035 4.4304 5.4365 6.6586 8.1403 23 1.2572 1.4084 1.5769 1.9736 2.4647 3.07 15 3.8197 4.7405 5.8715 7.2579 8.9543 24 1.2697 1.4295 1.6084 2.0328 2.5633 3.2251 4.0489 5.0724 6.3412 7.9111 9.8497 25 1.2824 1.4510 1.6406 2.0938 2.6658 3.3864 4.2919 5.4274 6.8485 8.6231 10.8347 26 1.2953 1.4727 1.6734 2.1566 2.7725 3.5557 4.5494 5.8074 7.3964 9.3992 11.9182 27 1.3082 1.4948 1.7069 2.2213 2.8834 3.7335 4.8223 6.2139 7.9881 10.2451 13.1100 28 1.3213 1.5172 1.7410 2.2879 2.9987 3.9201 5.1117 6.6488 8.6271 11.1672 14.4210 29 1.3345 1.5400 1.7758 2.3566 3.1187 4.1161 5.4184 7.1143 9.3173 12.1722 15.8631 30 1.3478 1.5631 1.8114 2.4273 3.2434 4.3219 5.7435 7.6123 10.0627 13.2677 17.4494 Note: For more detalled tables, see your reference booklet, the Business Math Handbook. CO
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