6 year investment with 11%

Question

How much will you have saved after 6 years by contributing $1,200 at the end of each year if you expect to earn 11% on the investment?

I got $9,490.91. My partner got $5,076.65.

Who's right and why?

Answer 1

Hi Robin,

The answer $9,490.91 should be correct. The question uses the word " .. have saved after 6 years..". Thus, it is asking the money in future terms.

You can use the excel formula =FV(Rate,Nper,Pmt,Pv,Type) to get the solution.

Your partner calculated the amount in present value terms. Hence the difference in answers.

I hope that makes sense.

Thanks.