TVM11 - Future Value of an Ordinary Annuity Due, Retirement Problem
This is a future value of an annuity due problem in which the future value is the unknown.
You would like to create a retirement fund. You deposit $3,000 today in a savings account that earns 6.5% interest. You plan to deposit $3,000 every year for a total of 35 years. How much cash will you accumulate in your retirement savings account when you retire in 35 years?
This is a future value of an annuity due problem, in which the future value is the unknown.
First, plug in the known values into the appropriate cells:
The number of periods – NPER – is 35
The interest rate – Rate – is 6.5%
The payment – PMT – is ($3,000.00)
Going to the formulas tab, look for the FV function.
For Type = 1, since payment occurs at the beginning of the period
The FV is $396,291