Can you show me how to answer this problem using a financial Calculator? Your jo

Question

Can you show me how to answer this problem using a financial Calculator?

Your job pays you only once a year for all the work you did over the previous 12 months. Today, December 31, you just received your salary of $60,000 and you plan to spend all of it. However, you want to start saving for retirement beginning next year. You have decided that one year from today you will begin depositing 8 percent of your annual salary in an account that will earn 10 percent per year. Your salary will increase at 3 percent per year throughout your career How much money will you have on the date of your retirement 40 years from today? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16) Future value

Explanation / Answer

we need to use FV of growing annuity for finding the ending balance

Future value = payment * ((1+g)^n - (1+r)^n)/(g - r)

payment = 8% of $60000 = $4800

g is growth rate

r is interst rate

= 4800 * (1.03^40 - 1.08^40)/(.03 - .08)

= $1772398.44

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