Question
When Joe and Sarah graduate from college, each expects to work a total of 45 years. Joe begins saving for retirement immediately. He plans to
When Joe and Sarah graduate from college, each expects to work a total of 45 years. Joe begins saving for retirement immediately. He plans to deposit $750 at the end of each quarter into an account paying 6.9% interest, compounded quarterly, for 10 years. He will then leave his balance in the account, earning the same interest rate, but make no further deposits for 35 years. Sarah plans to save nothing during the first 10 years and then begin depositing $750 at the end of each quarter in an account paying 6.9% interest, compounded quarterly for 35 years. Complete parts (a) through (e) below.
a. Without doing any calculations, predict which one will have the most in his or her retirement account after 45 years. Then test your prediction by answering the following questions. Choose the correct answer below.
b. How much will Joe contribute to his retirement account (Round to the nearest dollar.)
c. How much will be in Joe's account after 45 years? (Round to the nearest dollar.)
d. How much will Sarah contribute to her retirement account? (Round to the nearest dollar.)
e. How much will be in Sarah's account after 45 years? (Round to the nearest dollar.)
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