How much money will jamaal have in forty-five years

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Reference no: EM132995691

Jamaal and Miya are 22, newly married, and ready to embark on the journey of life. They both plan to retire 45 years from today. Because their budget seems tight right now, they had been thinking that they would wait at least 10 years and then start investing $2400 per year to prepare for retirement. Miya just told Jamaal, though, that she had heard that they would actually have more money the day they retire if they put $2400 per year away for the next 10 years - and then simply let that money sit for the next 35 years without any additional payments - then they would have MORE when they retired than if they waited 10 years to start investing for retirement and then made yearly payments for 35 years (as they originally planned to do). Please help Jamaal and Miya make an informed decision:

Assume that all payments are made at the END a year (or month), and that the rate of return on all yearly investments will be 8.4% annually.

Problem a) How much money will Jamaal and Miya have in 45 years if they do nothing for the next 10 years, then put $2400 per year away for the remaining 35 years?

Problem b1) How much money will Jamaal and Miya have in 10 years if they put $2400 per year away for the next 10 years?

Problem b2) How much will the amount you just computed grow to if it remains invested for the remaining
35 years, but without any additional yearly deposits being made?

Reference no: EM132995691

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