You and your friend are both 20 years of age. You decide to invest $200/month for 15 years in an investment earning 6% annually (compounded monthly) and then you stop making contributions. You then let the money sit and continue to compound for another 25 years. Your friend waits 15 years and then begins investing $350/month for the next 25 years also in an investment earning 6% annually (compounding monthly). What is the value of your friend's portfolio at age 60? $274,574 $242,548 $259,699 $228,862
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You and your friend are both 20 years of age.
You decide to invest $200/month for 15 years in an investment earning 6% annually (compounded monthly) and then you stop making contributions. You then let the money sit and continue to compound for another 25 years.
Your friend waits 15 years and then begins investing $350/month for the next 25 years also in an investment earning 6% annually (compounding monthly).
What is the value of your friend's portfolio at age 60?
$274,574
$242,548
$259,699
$228,862
The concept of TVM states that money inherently has an interest-earning capacity which makes the money received today worth more than the same amount received at a later date. It is one of the most important concepts of finance.
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