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You are 29 years old and decide to start saving for your retirement. You plan to save $6,000 at the end of each year (so
You are 29 years old and decide to start saving for your retirement. You plan to save $6,000 at the end of each year (so the first deposit will be one year from now), and will make the last deposit when you retire at age 65. Suppose you earn 6% per year on your retirement savings, how much will you have saved for retirement right at age 65? (Round to the nearest dollar.) Answer: A rich relative has bequeathed you a growing perpetuity. The first payment will occur in one year and will be $8908 each. Each year after that, you will receive a payment on the anniversary of the last payment that is 2.5% larger than the last payment. This pattern of payments will go on forever. If the interest rate is 7% per year, what is the present value of the bequest? (Keep 2 decimal places.)
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