Use the present value charts for capital budgeting

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Reference no: EM131259686

You will use the present value charts for capital budgeting in this chapter. Here try using the future value tables to show yourself the difference that waiting 10 years to start saving for retirement can make. Assume you are 27 and start saving $3,000/year. You do this for 10 years before circumstances prevent you from saving any more, but the money that has amassed will continue to sit and earn 10%, like it has from when you first started saving, until you retire at age 67 (another 30 years). So you will first use the FVA (Future Value of an Annuity) of $1 chart for $3,000 at 10% for 10 years; then use that resulting number in a FV of $1 chart for 30 years (periods) at 10% to see how much you would have at retirement. Next, assume you wait until age 37 to start saving, but no circumstances cause you to stop (A very rare occurrence in real life! Unexpected things almost always will happen to derail your best saving intentions!). SO for this one, you will use just the FVA chart, still using $3,000 and 10%. Show your work and results, as well as comments.

Reference no: EM131259686

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