Thelma and Thomas want to retire with $2,000,000 in their portfolio. They plan on putting away $20,000 per year into five different accounts each year ($4,000 per account). They have set up the following accounts and the first contributions will be made at the end of this year. All contributions will be made at the end of each year.

Money Market Account

Government Bond Mutual Fund

Large Capital Mutual Fund

Small Capital Mutual Fund

Real Estate Trust Fund

The Money Market grows at 2.5% annually, the Government Bond Mutual Fund grows at 5.5% annually, the Large Capital Mutual Fund grows at 9.5% annually, the Small Capital Mutual Fund grows at 12.0% annually and the Real Estate Trust Fund grows at 4.0% annually.

Required

Calculate the amount that is accumulated under each fund and show the total accumulation after 15 years.

Using a spreadsheet, calculate the end of year balance for the portfolio with the assumption that no additional funds will be deposited into any of these accounts above the $4,000 annual contributions to each account in each year. How long until they reach the $2,000,000 goal?

Answer rating: 100% (QA)

To calculate the amount accumulated under each fund and the total accumulation after 15 years we can ... View the full answer