Sydney saved $10,000 during her first year of work after college and plans to invest it for her retirement in 40 years. How much will she have available for retirement if she can make 8% on her investment? HINT: FVIF Select one: a. $596,250 b. $432,000 c. $345,100 d. $217,250 Question 19 Not yet answered Marked out of 1.00 Flag question Question text Compounding monthly versus annually causes the interest rate to be effectively higher, and thus the future value: Select one: a. grows. b. decreases. c. is independent of the monthly compounding. d. is affected only if the calculation involves an annuity due. Question 20 Not yet answered Marked out of 1.00 Flag question Question text Scenario A: At age 27, you invest $1,500 that earns 9 percent each year. Scenario B: At age 40, you invest $2,500 that earns 11 percent per year. Under which scenario do you accumulate more money by age 60? Select one: a. Scenario A b. Scenario B c. Both scenarios have the same value by age 60 d. Need more data to answer Solution Solution: Question 19 Compounding monthly versus annually causes the interest rate to be effectively higher, and thus the future value: Answer to the above question is - d. is affected only if the calculation involves an annuity due. Question 20 Answer - a. Scenario A .

1. Sydney saved $10,000 during her first year of work after college and plans to invest it for her
retirement in 40 years. How much will she have available for retirement if she can make 8% on
her investment? HINT: FVIF
Select one:
a. $596,250
b. $432,000
c. $345,100
d. $217,250
Question 19
Not yet answered
Marked out of 1.00
Flag question
Question text
Compounding monthly versus annually causes the interest rate to be effectively higher, and thus
the future value:
Select one:
a. grows.
b. decreases.
c. is independent of the monthly compounding.
d. is affected only if the calculation involves an annuity due.
Question 20
Not yet answered
Marked out of 1.00
Flag question
Question text

2. Scenario A: At age 27, you invest $1,500 that earns 9 percent each year. Scenario B: At age 40,
you invest $2,500 that earns 11 percent per year. Under which scenario do you accumulate more
money by age 60?
Select one:
a. Scenario A
b. Scenario B
c. Both scenarios have the same value by age 60
d. Need more data to answer
Solution
Solution:
Question 19
Compounding monthly versus annually causes the interest rate to be effectively higher, and thus
the future value:
Answer to the above question is - d. is affected only if the calculation involves an annuity due.
Question 20
Answer - a. Scenario A
Amount Saved $ 10,000
Rate 8%
Time 40 years
Amount available = Amount saved * FVIF(8
%,40 years)
FVIF(8 %,40 years) 21.7245

3. $ 217,245