Question
Today is your 20th birthday. Your parents just gave you $8,000 which you immediately invest in a stock mutual fund. Your plan is to add
Today is your 20th birthday. Your parents just gave you $8,000 which you immediately invest in a stock mutual fund. Your plan is to add $750 to the stock fund each year on your birthday. Your first $750 contribution will come one year from now on your 21st birthday. You will make a total of 40 payments. (Your 40th and final $750 contribution will occur on your 60th birthday.) However, you plan to withdraw $10,000 from the account 10 years from now to take a trip to Asia. You expect that the account will have an average annual return of 12 percent. How much money will you have in the account on your 60th birthday (i.e., 40 years)
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