Consider five investment plans at annual interest rates of 4.85% compounded monthly

 

Investor A:

Invest $320 per year for the first 10 years of his career. At the end of 10 years, make no further investments, but reinvest the amount accumulated at the end of 10 years for the next 30 years.

 

Investor B:    

Do nothing for the first 10 years. Then start investing $320 per year for the next 30 years.

 

Investor C:    

Invest $320 per year for the entire 40 years.

 

Investor D:

Invest $320 per year for the first 5 years, then stop for five years, continue again five years subsequently. After that, make no further investments, but reinvest the amount accumulated at the end of 15 years for the next 25 years.

 

Investor E:    

Put a lump sum of $5,000 now and start investing $320 per year after the 15 years.

 

Note that all investments are made at the end of each year; the first deposit will be made at n = 1,  Calculate the balance at n = 40.

Answer rating: 100% (QA)

To calculate the balance at n 40 for each investment plan well use the formula for compound interest ... View the full answer