Question
H. A 20-year-old student wants to save $5 a day for her retirement. Every day she places $5 in a drawer. At the end of
H. A 20-year-old student wants to save $5 a day for her retirement. Every day she places $5 in a drawer. At the end of each year, she invests the accumulated savings ($1,825) in a brokerage account with an expected annual return of 8%.
(1) If she keeps saving in this manner, how much will she have accumulated at age 65? Please list the inputs of your financial calculator. (3 points)
H. (2) If a 40-year-old investor began saving in this manner, how much would he have at age 65? Please list the inputs of your financial calculator. (3 points)
H. (3) How much would the 40-year-old investor have to save each year to accumulate the same amount at 65 as the 20-year-old investor? (Hints: FV is the same as your answer in H(1). Number of years is the same as H(2). Then what is the annual payment?) Please list the inputs of your financial calculator. (4 points)
PLEASE DRAW TIMELINE IF IT IS ASKED.
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