Compound Interest (Business)/(Finance) question ???

An insurance agent offers services to clients who are concerned about their personal financial planning for retirement. To emphasize the advantages of an elderly start to investing, she points out that a 25-year-old person who saves $2000 a year for 10 years ( and makes no more contribution at age 34) will earn more than by waiting 10 years and then saving $2000 a year from age 35 until retirement at age 65 (a total of 30contributions). Find the net earning (compound amount minus total contributions) at age 65 for both situations. Assume an effective annual rate of 7%, and suppose that deposites are made at the begining of each year. Round answers to the nearest dollar.

Find the net earning (compound amount minus total contributions) at age 65 for both situations???

The person who started saving at 25 years old will have $226,726 in the account when they are 65. Subtract the $20,000 they invested and the total interest earned is $206,726.

The person who started saving at 35 years old will have $196,887 in the account when they are 65. Subtract the $60,000 they invested and the total interest earned is $136,887.

http://moneycentral.msn.com/In...

This site is MSN's savings calculator. I used this to figure everything out. Report It

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