FIN 100 FIN100 WEEK 6 HOMEWORK SOLUTIONS (STRAYER UNIVERSITY)
Strayer FIN 100 Week 6 Homework Answers - 2020
Explain the results in terms of time value of money
Beth started contributing at the age of 20 years old and contributed $6000 annually. This is a very young age to start contributing. Her investment totaled $113,862.76 which was for a 12 year period. She left her IRA to continue to grow and it compounded, and she ended up with $1,443,330.00 at her retirement age of 65. Larry started contributing at the age of 32 which was kind of late compared to Beth. Nevertheless, he too, contributed $6000 annually. Since he contributed for the entire time 33 years until the age of 65 (33 contributions) his retirement was slightly less than Beth amount. He only had a retirement of $1,021,816.32. The reason
Beth was able to retire with more money is because she contributed for 12 contributions and then her money compounded as
she let it sit there until she retired. Larry on the other hand contributed for the straight 33 contributions with no compounded interest.
Larry would have gained more if he had started contributing earlier in life. In addition, Beth would have gained an enormous
amount if she had continued to contribute from age 32-65.
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