10. You just started on your brand new career and you want to make sure that you

Question

10. You just started on your brand new career and you want to make sure that you make the most of your future salary and want to save for retirement. You found an investment that will pay you 6.85% compounded quarterly and you want to put in 15% of your salary every paycheck, which is every other week (26 pay periods in a year. You start your new job at $42,000 a year and you are told that every 3 years you will get a 3.75% raise. How much will be in your retirement fund at the end of 42 years of working?

Explanation / Answer

15% of salary is $42,000 * 0.15 = $6,300 26 times a year Okay so interest happens quarterly, 4 times a year. Meaning every 26 weeks/4 = 6.5 weeks 6.5 weeks means 3 payments not 3.75 payments. Use this formula before raise (x + $6,300 * 3) * 1.0658 (6.58% interest) x = ($6,300 * 3 ) * 1.0658 if quarter is greater than 1 in first year. Quarter 1 ------($6,300 * 3 ) * 1.0658 = $20,143.62 Quarter 2 ------($20,143.62 + $18,900) * 1.0658 = $41,612.69 etc etc...... 42 years is 168 quarters, every 12 quarters 3.75% raise. I hope this gave you some kind of idea on how get started, honestly in my opinion this question would take days to solve since it has that 3.75% raise variable. I'm not surprised you need help with it, is very hard indeed. I'm really sorry. Hope this helped though, best of luck.

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