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Question 6.OO: You do not start saving money until age 46. On your 46th bir...

You do not start  saving  money  until age  46. On your 46th  birthday you  dutifully  invest  $10,000 each year  until  you finish your deposits when you reach the age of 65. The annual interest rate is 8% that you earn on your deposits. Your brother starts saving $10,000 a year on his 36th birthday but stops making deposits after 10 years. He then withdraws the compounded sum when he reaches age 65. How much more money will your brother have than you at age 65?

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Your future worth will be F = $10,000 (F/A, 8%, 20) = $457,620.

Your brother’s future worth will be F =  $10,000 (F/A, 8%, 10) (F/P, 8%, 20) = $675,220. Your brother will have  $675,220 – $457,620 = $217,600 more than you.

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