I came across a rather absurd FVIF question in my assignment. It involves a fixed-term deposit of $60,000 for 25 years at a 9% interest rate, compounded annually, which results in a final amount of $517,386. I’m reaching out to fellow senior accountants to see if this interest rate and the 25-year term are even realistic. To me, this seems more fictional than anything. If such rates actually exist, I might just quit Accounting and start saving $60,000 right away! 😂
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One response
It sounds like you’re definitely wrestling with the practicality of those numbers! A 9% annual return on a fixed-term deposit is quite optimistic and not typically seen in today’s market. Most savings accounts and fixed-term deposits offer much lower interest rates, especially for such a long duration like 25 years.
However, the calculation itself is sound—if you do manage to find an investment with that rate, the compounding effect over 25 years can lead to a significant return. Just remember that high returns often come with higher risks. So, while it’s fun to think about the potential benefits, it’s important to be cautious and realistic about the investments you’re considering.
If you’re thinking about quitting Accounting for a high-yield investment like that, make sure you thoroughly research and consider various options first! 😄