1. You are 20 years old. You plan to work until you are 80 years old. When you turn 80 you will retire. You expect to live until an age of 95. You have forecasted that you will need $100,000 a year in income for your retirement.

   Your current salary is $45,000 per year. You expect your salary to grow by 3% per year.

   You will save 1% of your gross income each year.

   You will invest your savings in risk free treasury notes that are expected to yield 3% each year.

   We assume your first investment is made at the end of year 1 based on your year 0 salary. In other words you save 1% of your base year salary at the end of year 1 and then you save 1% of your year 1 salary at the end of year 2. Essentially we are assuming that you are paid at the end of each year. Not realistic but it simplifies our work.

   Once you retire assume that your money is deposited in a checking account and earns 1% interest.

   Data for payment function "PMT"

   data for payment

   rate

   nper

   pv

   fv

   type

   we assume that fv = 0 and type = 0.

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   Based on this information you will have accumulated enough wealth to finance your retirement.

   True

   False