Following her 18th birthday, Madison began investing $44 at the end of each week in an account earning 5% per year (compounded weekly). She plans to continue making weekly investments until she turns 68. If she hadn't started investing until she turned 57, how much would she have to invest weekly after that in order to have the same retirement nest egg at age 68? Round to the nearest cent. ​[Hint: Find the size of the retirement nest egg under the first scenario, then use that number to solve for CF under the shorter investment scenario.]

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Asked Feb 9, 2020
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Following her 18th birthday, Madison began investing $44 at the end of each week in an account earning 5% per year (compounded weekly). She plans to continue making weekly investments until she turns 68. If she hadn't started investing until she turned 57, how much would she have to invest weekly after that in order to have the same retirement nest egg at age 68? Round to the nearest cent. ​[Hint: Find the size of the retirement nest egg under the first scenario, then use that number to solve for CF under the shorter investment scenario.]

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Expert Answer

Step 1

The computation is as follows:

Finance homework question answer, step 1, image 1

Hence, the retirement nest egg is $511041.72.

Step 2

Working note:

Finance homework question answer, step 2, image 1

Step 3

Finance homework question answer, step 3, image 1

Hence, the weekly deposit is $670.56.          

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