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Mark saves a fixed percentage of his salary at the end of each year. This year he saved $1,500. For the next five years, he
Mark saves a fixed percentage of his salary at the end of each year. This year he saved $1,500. For the next five years, he expects his salary to rise at an 8% annual rate, and he plans to increase his savings at the same 8% annual rate. He invests his money in the stock market. Thus there will be six end-of-year investments (the initial $1,500 plus five more). Solve the prob- lem by using the geometric gradient factor. (a) How much will the investments be worth at the end of six years if they increase on the stock market at a 10% annual rate? (b) How much will Mark have at the end of six years if his stock market investments increase only at 8% annually
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