This is from an Excel class in Financial Technology. Maybe someone can enlighten me on what the professor did.
The professor had the following cells on an Excel worksheet
Your age today
Age you'd like to retire
Balance of funds today
Expected rate of Inflation
Growth Rate of Cash Flows
Rate of Return on Investments
With the goal of finding the future value, given the above variables
So let's assign some numbers to these variables
Your age today =25
Age you'd like to retire =55
Years Invested 55-25=30
Balance of funds today=0
Expected rate of Inflation =4%
Growth Rate of Cash Flows =3.5%
Rate of Return on Investments= 8%
Using the Excel sheet, the professor got a future value of $1,306,055.37. If Excel formula is a big mess of functions and named cells that I haven't bothered to decipher yet, so I wanted to see if I could get the same result as he did by hand.
I thought the answer was
To get the present value and then multiply by to get the future value.
Which would give
That's much lower than what the professor got.
Anyway, I attached the Excel sheet. Maybe someone can decipher it for me. This isn't going to be on any exams or anything, so I doubt the professor will spend the time to go over it