Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are saving for your retirement. You have decided that one year from today you will deposit 5 percent of your annual salary in an

You are saving for your retirement. You have decided that one year from today you will deposit 5 percent of your annual salary in an account which will earn 6 percent per year. Your salary currently (today) is 90000, and it will increase at 2 percent per year throughout your career. How much money will you have for your retirement, which will begin in 40 years? Assume your first payment into the account is one year from today after your first increase. In other words, your next year's paycheck (year1) is more than 90000 since it will increase by 2 percent each year.

a. 441,161.55

b. 710,400.00

c. 816,439.83

d. 909,513.99

e. 926,913.58

please show work so i can understand it

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations of Finance The Logic and Practice of Financial Management

Authors: Arthur J. Keown, John D. Martin, J. William Petty

8th edition

132994879, 978-0132994873

More Books

Students also viewed these Finance questions