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Problem 3: You and your partner are thinking about getting married in a few years. You both recently graduated from Memorial University and were able
Problem 3: You and your partner are thinking about getting married in a few years. You both recently graduated from Memorial University and were able to get entry-level (but relatively well-paying) jobs as junior engineers for a consulting company. You want to start saving to buy your dream house as a couple in 10 years. One idea is to put aside $90,000 per year for the next 10 years. The other idea is to start with a smaller amount of $75,000 per year but to increase your investments based on your annual increase in salaries. If you expect your salaries to increase by 5.5 percent per year and your savings can grow at an interest rate of 11.6 percent per year, which plan will accumulate more money at the end of ten years? NOTE: Show all your workings, i.e., assumptions, rationale, formulae, cash flow diagrams, etc., to get full credit
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