A young scientist has just started her career with a federal government agency.
ID: 2631958 • Letter: A
Question
A young scientist has just started her career with a federal government agency. She has good job security and expects consistent 5% annual salary increases. Her starting annual salary is $30,000. She plans to save 10% of her monthly salary at a bank, which pays 5.4% interest, compounded monthly. At the end of each year, she will put the accumulated savings into a money market fund that is expected to pay 8% interest at the end of each year. Calculate the amount of money she expects to have after ten years.
Explanation / Answer
Scientist's starting annual salary = $30,000
Annual Salary Increase = 5%
Scientist's Savings: 10% of her monthly salary
Interest on her savings = 5.4% (Compounded Monthly)
Interest on her accumulated savings deposit = 8%
The total money she expects to have after ten years are: $41394.70
The calculation for amount of money she expects to have after ten years are as follows:
BANK SAVING Month YEAR 1 YEAR 2 YEAR 3 YEAR 4 Saving amount Interest Balance Saving amount Interest Balance Saving amount Interest Balance Saving amount Interest Balance 1 250.00 - 250.00 262.50 - 262.50 275.63 - 275.63 289.41 - 289.41 2 250.00 1.125 501.13 262.50 1.181 526.18 275.63 1.240 552.50 289.41 1.302 580.12 3 250.00 2.255 753.38 262.50 2.368 791.05 275.63 2.486 830.62 289.41 2.611 872.14 4 250.00 3.390 1,006.77 262.50 3.560 1,057.11 275.63 3.738 1,109.98 289.41 3.925 1,165.48 5 250.00 4.530 1,261.30 262.50 4.757 1,324.37 275.63 4.995 1,390.61 289.41 5.245 1,460.13 6 250.00 5.676 1,516.98 262.50 5.960 1,592.83 275.63 6.258 1,672.50 289.41 6.571 1,756.11 7 250.00 6.826 1,773.80 262.50 7.168 1,862.49 275.63 7.526 1,955.65 289.41 7.903 2,053.43 8 250.00 7.982 2,031.79 262.50 8.381 2,133.37 275.63 8.800 2,240.08 289.41 9.240 2,352.08 9 250.00 9.143 2,290.93 262.50 9.600 2,405.47 275.63 10.080 2,525.79 289.41 10.584 2,652.07 10 250.00 10.309 2,551.24 262.50 10.825 2,678.80 275.63 11.366 2,812.79 289.41 11.934 2,953.41 11 250.00 11.481 2,812.72 262.50 12.055 2,953.35 275.63 12.658 3,101.08 289.41 13.290 3,256.11 12 250.00 12.657 3,075.38 262.50 13.290 3,229.14 275.63 13.955 3,390.66 289.41 14.653 3,560.18 3,000.00 75.38 3,150.00 79.14 3,307.56 83.10 3,472.92 87.26 MONEY MARKET YEAR YEAR 1 YEAR 2 YEAR 3 YEAR 4 Saving amount Interest Balance Saving amount Interest Balance Saving amount Interest Balance Saving amount Interest Balance 3,075.38 0 3,075.38 6,304.52 246.03 6,550.55 9,695.18 504.36 10,199.54 13,255.36 775.61 14,030.97Related Questions
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