Using the exponential model for compound interest earned periodically, solve the following. Assume all interest is compounded monthly unless otherwise given, and the interest rate is 2.625%. Remember to show all calculations and how you used the formula. Show what numbers you enter into the calculator.
1. Assume that you deposited $1000 in an investment account on your 18thbirthday. How much would you have in the account now? How much would you have on your 68th birthday?
2. Assume the account was opened on your 25thbirthday; how much would be in the account on your 68thbirthday?
3. Assume the account is opened on your 40thbirthday; what is its value on your 68thbirthday?
4. Change the invested amount to $5000 and answer the questions above.
5. You want to have $1.5 million in the account on your 68thbirthday. How much would you need to invest at age 18 to reach your goal? Age 30? Age 50?
6. What would be your advice to anyone wanting to invest for retirement? Why?
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