To determine how much Devin's investment will be worth at retirement, we need to use the Future Value (FV) function in Excel. The correct function format is:

excelCopy code
=FV(rate, nper, pmt)

Where:

• rate is the monthly interest rate (annual interest rate divided by 12).
• nper is the total number of periods (in this case, months).
• pmt is the monthly payment or contribution (which is $320).

The key details from the problem are:

• The annual interest rate (APR) is 8.8%, which needs to be divided by 12 to convert to a monthly rate.
• Devin will contribute for 30 years, so the total number of months is $30 \times 12 = 360$.
• The monthly contribution is $320.

Now, let's go through each option:

A. =FV(0.088/12,30*12,-$320)

• rate: $\frac{0.088}{12}$ → Correct (8.8% APR divided by 12).
• nper: $30 \times 12$ → Correct (30 years times 12 months).
• pmt: $-320$ → Correct (negative because it's an outgoing payment).

This option is correct.

B. =FV(8.8/12,12*30,-320)

• rate: $\frac{8.8}{12}$ → Incorrect (8.8 is not expressed as a percentage, it should be 8.8% or 0.088).
• nper: $12 \times 30$ → Correct.
• pmt: $-320$ → Correct.

This option is incorrect because the rate is not in percentage form.

C. =FV(0.088/12,360,-320)

• rate: $\frac{0.088}{12}$ → Correct.
• nper: $360$ → Correct (30 years is 360 months).
• pmt: $-320$ → Correct.

This option is correct.

D. =FV(8.8,30,-$320)

• rate: $8.8$ → Incorrect (the rate should be divided by 12 and expressed as a percentage).
• nper: $30$ → Incorrect (the period should be in months, i.e., 360).
• pmt: $-320$ → Correct.

This option is incorrect because both the rate and the period are wrong.

E. =FV(8.8%/12,12*30,-320)

• rate: $\frac{8.8\%}{12}$ → Correct.
• nper: $12 \times 30$ → Correct.
• pmt: $-320$ → Correct.

This option is correct.

Correct Options:

• A, C, and E.

Would you like more details on how this function works or any other questions?

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Here are five questions you could explore next:

1. How does the Future Value (FV) formula change if the interest is compounded quarterly instead of monthly?
2. What would happen to the final amount if Devin's contribution was increased by 5% each year?
3. How would the calculation change if Devin planned to retire in 25 years instead of 30?
4. What if Devin received a 1% employer match on his 401(k) contributions? How would that affect his retirement savings?
5. What are the differences between using the FV function in Excel and manually calculating future value with a compound interest formula?

Tip: Always ensure to adjust interest rates to match the compounding period (monthly, quarterly, etc.) when using financial formulas.