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Assume that: You start working at age 2 3 with an entry salary of $ 7 5 , 0 0 0 per year. You expect

Assume that:
You start working at age 23 with an entry salary of $75,000 per year.
You expect to work until you retire at age 67.
Your salary will increase each year by 3% annually.
You save 20% of you annual income for retirement, which is invested at 7% return
annually.
(25 points) What is your final working salary and how much money will you have saved
when you reach the age of 67?
(25 points) If you expect to live to age 80 and spend evenly throughout your retirement
years, how much money can you spend annually? Assume that the money that is not
spent is growing at 7% annually.
(25 points) If you spent roughly $150,000 in tuition, living and other expenses during the
4 years that you studied your degree, what are the NPV and IRR on your undergrad
studies?
(25 points) How would your answers to questions 1,2 and 3 change if the rate of return
of the investment was 7% annually, but continuously compounded?
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