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?