Question
Suppose the following: Next year you contribute to your pension fund an amount of 1,000 euros Each year you increase the contribution by 2% over
Suppose the following:
Next year you contribute to your pension fund an amount of 1,000 euros Each year you increase the contribution by 2% over the contribution of the previous year The applicable discount rate is 6% per year
Choosing all that apply:
A. The accumulated value of all these contributions to your pension fund expressed in today's money would amount to less than 25,000 euros after 45 years of contributions
B. If genetic research succeeded in making you immortal and you made these 2% increasing annual contributions to your pension fund from here to eternity (instead of just 45 years), the accumulated value of all these contributions to your pension fund expressed in today's money would amount to 25 million euros
C. Now, if each year you increase your contributions by 6% while the applicable discount rate is 2%, then the accumulated value of all these contributions to your pension fund expressed in today's money would amount to more than 100,000 euros after 45 years of contributions
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