You are saving for your retirement. You have decided that one year from today yo

Question

You are saving for your retirement. You have decided that one year from today you will deposit 4% of your current $50,000 salary ($2,000) into an account that will earn 6% per year, compounded quarterly. You expect your salary will increase at 1.5% per year throughout your career. How much money will you have in your retirement account at the end of your working career, thirty-five years from now, if you continue to make annual deposits equal to 4% of your salary -- a total of thirty-five deposits.

Explanation / Answer

Presnt value of deposits = 2000/(1+4%/4)^4 + 2000*1.015/(1+4%/4)^8 + 2000*1.015^2/(1+4%/4)^12.......... = $45,450.89 Future value at the time of retirement = 45,450.89*(1+1%)^140 = $183035.24

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.