Your job pays you only once a year for all the work you did over the previous 12
ID: 2730017 • Letter: Y
Question
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 $70,000 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 11.0 percent per year. Your salary will increase at 4 percent per year throughout your career. How much money will you have on the date of your retirement 45 years from today?
Explanation / Answer
Solution.
Calculation of amount.
2.
Year Salary Increasement Total salary 1 70,000 2,800 72,800 2 72,800 2,912 75,712 3 75,712 3,028 78,740 4 78,740 3,150 81,890 5 81,890 3,276 85,166 6 85,166 3,407 88,572 7 88,572 3,543 92,115 8 92,115 3,685 95,800 9 95,800 3,832 99,632 10 99,632 3,985 103,617 11 103,617 4,145 107,762 12 107,762 4,310 112,072 13 112,072 4,483 116,555 14 116,555 4,662 121,217 15 121,217 4,849 126,066 16 126,066 5,043 131,109 17 131,109 5,244 136,353 18 136,353 5,454 141,807 19 141,807 5,672 147,479 20 147,479 5,899 153,379 21 153,379 6,135 159,514 22 159,514 6,381 165,894 23 165,894 6,636 172,530 24 172,530 6,901 179,431 25 179,431 7,177 186,609 26 186,609 7,464 194,073 27 194,073 7,763 201,836 28 201,836 8,073 209,909 29 209,909 8,396 218,306 30 218,306 8,732 227,038 31 227,038 9,082 236,119 32 236,119 9,445 245,564 33 245,564 9,823 255,387 34 255,387 10,215 265,602 35 265,602 10,624 276,226 36 276,226 11,049 287,275 37 287,275 11,491 298,766 38 298,766 11,951 310,717 39 310,717 12,429 323,146 40 323,146 12,926 336,071 41 336,071 13,443 349,514 42 349,514 13,981 363,495 43 363,495 14,540 378,035 44 378,035 15,121 393,156 45 393,156 15,726 408,882Related Questions
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