Problem: Jane and Joan were twins. They both went to work at age
identical jobs, and at the end of each year they recieved identical
$2,000.00. But there was one difference:
At their retirement party (when they were both 65), the conversation got
to retirement plans and savings programs. Each sister was proud of her
activities, terms and accumulations.
Using the following format,
build a spreadsheet to keep track of the twins' age, Joan's
Annual Deposit, Joan's Total, Jane's Annual Deposit and
Jane's Total, so that we can compare their savings each year.
To build the formula for Joan's total and Jane's total, consider how
total new money = old money*(1 + rate) + new money deposited
The 8% interest rate should be considered an average over time that Joan
are saving their money. What if this is not a good estimate? Even in
interest rates have gone as high as 15% and as low as 4% for certain
stocks, annuities and savings plans.
Experiment with the interest rate (if you build your formulas right, this
a matter of changing one number!) to see what happens at different rates.
the interest rate make a difference in your answer?
Write up a lab report
(be sure to follow the
to 22 year old twins Jeff and Jeremy,
who are deciding whether to start saving for retirement now,
or to use their bonuses to travel.
Include one of your excel sheets, this sheet containing the answers
to the questions in Part 1,
and Part 2 filled in with numbers.
Extra Credit: What rate yields the same earnings for Joan and Jane?
Explain how you obtained your answer.