FINC 331 Week 3 student discussion

timer Asked: Apr 3rd, 2016

Question description

Please respond to Dana:

According to Federal Deposit Insurance Corporation (FIDC) (2016), the current average savings interest rate (as of 28 March, 2016) is 0.06 or 6% - the example rate given in the CNN Calculator (2016) was just 5%.  For the purpose of this week’s discussion, I have changed the interest rate in the CNN calculator from 5% to the current national average of 6% found in the FDIC website.

At 51, if you contribute $0 now and $543 a week, by the time you reach retirement age of 70, your earnings will have reached your goal of $1,001,731.  This comes to $2353 a month (if you consider 52 weeks a year versus 4 weeks a month).  But if you contribute monthly as oppose to weekly, your earnings will drop to $992,447.

If starting at 25 with a retirement age of 65 and starting with $0 in savings, contributing $503 a month will earn your daughter a savings of $1,001,719.  If we take the monthly cost and multiply by 12 (annual contribution) and then divide by 52 (weekly contribution), the weekly contribution will be $125 (rounded down) and the savings will increase to 1,084,193.

If starting at age 2 and having a goal to contribute until your grandson graduates from college (where he will then pick up the bill), you and your daughter could contribute $28 weekly cumulative, bringing the earnings to $56,245 by his 22ndBirthday.  If he then deposits the $56,245 and continues the $28 weekly contribution for another 43 years, his retirement savings will turn into $1,036,677.  If monthly payments were considered, then the payments would be $121 (rounded down) and would earn $1,026,195.

Retirement Savings


CNN Calculator, (2016).  Savings interest calculator.  CNN Money.  Retrieved from

FDIC, (2016).  Weekly national rates and rate caps.  Federal Deposit Insurance Corporation.  Retrieved from

Tutor Answer

(Top Tutor) Studypool Tutor
School: Duke University
Studypool has helped 1,244,100 students
flag Report DMCA
Similar Questions
Hot Questions
Related Tags

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors