Time Value Of Money
Alice saves some amount of money every year for eight years. After that she just lets her money sit and collect interest. Bill spends his money for the first eight years and then decides to save the same amount that Alice had been saving and continues to save it through age 65. The assumption is that they both get the same constant rate of return. Who ends up with more money? Play with the spreadsheet and see how much differing amounts and different rates of return make. How much money would you like to see Alice and Bill save every year? What rate of return do they get? Input amounts below. (You may need to hit the recalculate button to see data):
