Question
Employee has $100,000 invested in her employer's retirement program. She makes annual contributions to a retirement fund at the end of each year in the
Employee has $100,000 invested in her employer's retirement program. She makes annual contributions to a retirement fund at the end of each year in the amount of $5,000, which are matched by her employers. Interest accumulates at the rate of 8 percent per year and is not subject to income tax until withdrawn.
A) Prepare a 15-year fund accumulation schedule that show total annual deposits, annual interest, and accumulate fund balance at the end of each year, plus totals for the 15 years; remember to include her initial $100,000 balance.
B) Show cell equations
Part 2
Assume the employee thinks she should have begun saving for retirement at age 25. All retirement fund deposits will accumulate at an 8% tax-free rate.
A) Determine the amount of the 40-equal annual end-of-year deposits she would have to make to equal the retirement accumulation of problem two.
B) What can you conclude from your solution to this problem?
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