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Suppose you are 25 years old and just got hired by a company. Your salary next year will be S60,000. Also, you should expect that your salary will increase at a steady rate of 4.5% per year until your retirement at age 65, If you save 10% of your salary each year and invest these savings at an interest rate of 6%, how much will you have saved at your retirement?

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Answer #1

1 We will compute the future value of saving:s Savings-10% of salary 6000.00 6270.00 6552.15 6847.00 7155.11 7477.09 7813.56 8165.17 8532.60 8916.57 9317.82 9737.12 10175.29 10633.18 Salary 25 60000 26 62700 27 б5522 28 68470 29 71551 30 74771 31 78136 32 81652 33 85326 34 89166 35 93178 36 97371 37 101753 38 106332 Future value @ 6% Age Salary 61714.30762 46 151214 60840.99195 47 158019 59980.03452 48 165130 59131.26044 49 172561 58294.49732 50 180326 57469.57519 51 188441 56656.32649 52 196921 55854.58602 53 205782 55064.19093 54 215042 54284.98068 55 224719 53516.79699 56 234831 52759.48383 57 245399 52012.88736 58 256442 51276.85593 59 267982 50551.24005 60 280041 49835.89231 61 292643 49130.66742 62 305812 48435.42213 63 319573 47750.01521 64 333954 47074.30745 65 348982 46408.16159 Savings: 10% of salary 15121.45 15801.91 16513.00 17256.08 18032.61 18844.07 19692.06 20578.20 21504.22 22471.91 23483.14 24539.89 Future value @ 6% 45751.44232 45104.01625 44465.75187 43836.51953 43216.19142 42604.64155 42001.74567 41407.38135 40821.42784 40243.76612 39674.27887 39112.85039 38559.36666 38013.71525 37475.78531 36945.4676 36422.65438 35907.23946 35399.11814 34898.18723 4 12 26798.17 40 116117 41 121342 42 126803 43 132509 44 138472 45 144703 11611.69 12134.22 12680.26 13250.87 13847.16 14470.28 29264.27 30581.16 31957.32 33395.39 34898.19 21 25 Amount saved 1929904.0291 We will com savings-10% of salary Future value @ 6% -c3( 1+6%)465-A3) -C4*( 1+696)^(65-A4) -cs*(1+6%)^(65-A5) -Сб( 1+6%)(65-46) -c7* (1+6%)165-A7) -C8( 1+6%)465-A8) =C9( 1+6%)(65-A9) C10*(1+6%)^(65-A10) -c11*(1+6%)^(65-A11) -c12*(1+6%)^(65-A12) -c13*(1+6%)^(65-A13) -c14*(1+6%)^(65-A14) -c15(1+6%)^(65-A15) -c16(1+6%)^(65-A16) -c17*(1+6%)^(65-A17) -c18*(1+6%)^(65-A18) -c19*(1+6%)^(65-A19) -c20*(1+6%)^(65-A20) -c21*(1+6%)^(65-A21) -c22*(1+6%)^(65-A22) -c23*( 1+6%)^(65-A23) Savings= 10% of sale Future value @ 6% «НЗ(1+6%)^(65-F3) H4*( 1+696)165-F4) -H5( 1+6%)^(65-F5) 2H6*(1+6%)^(65-F6) -H7( 1+6%)^(65-F7) -H8*( 1+6%)^(65-FB) «H9*( 1+6%)^(65-F9) B3*1096 -84*10% -85*10% -86*10% -87*10% -88*10% -89*10% -810*10% -811*10% -812*10% -813*10% -814*10% -815*10% -81610% -817*10% -818*10% -819*10% -820*10% -821*10% -822*10% -823*10% -A23+1-823*(1+4.5%) F3+1-63*(1+4.596) F4+1 -G4*(1+4.5%) F5+1-65*(1+4.596) FG+1 -G6*(1+4.5%) f7+1-67*(1+4.596) F841 -G8*(1+4.5%) -F9t1 -G9*(1+4.5%) F10+1 -G10*(1+4.5%) -F11+1-611*(1+4.5%) F12+1-612*(1+4.5%) F13t1 -G13*(1+4.5%) -F14+1 -G14*(1+4.5%) -F15+1 -G15(1+4.5%) -F16+1 -G16*(1+4.596) -F17+1-617*(1+4.5%) F18+1-618*(1+4.5%) F19t1-619*(1+4.5%) -F20+1 -G20*(1+4.5%) -F21+1 -G21*(1+4.5%) -63*10% G4*1096 -65*10% =G6*10% -67*10% G8*10% G9*10% -G10*10% -G11*10% -G12*10% -G13*10% -G14*1096 -G15*10% -G16*10% G17*10% -G18*10% -G19*10% -G20*10% -G21*10% -G22*10% 60000 10 A9+1 11 A10+1 12 A11+1 13 EA12+1 14 A13+1 15 A14+1 16 EA15+1 17 A16+1 18 EA17+1 19 A18+1 20 A19+1 B3*(1+4.5%) 84*(1+4.5%) B5(1+4.5%) B6*(1+4.5%) *(1+4.5%) 88*(1+4.5%) B9*(1+4.5%) B10*(1+4.5%) B11*(1+4.5%) B12*(1+4.5%) B13*(1+4.5%) B14*(1+4.5%) B15(1+4.5%) B16*(1+4.5%) B17*(1+4.5%) B18*(1+4.5%) B19*(1+4.5%) 820*(1+4.5%) B21*(1+4.5%) B22*(1+4.5%) H10(1+696)^(65-F10) H11*(1+6%)^(65-F11) H12*(1+6%)^(65-F12) H13*(1+6%)^(65-F13) H14*(1+6%)^(65-F14) H15(1+6%)^(65-F15) H16*(1+6%)^(65-F16) 17*(1+6%)^(65-F17) H18*(1+6%)^(65-F18) H19*( 1+6%)^(65-F19) H20*( 1+6%)^(65-F20) H21*(1+6%)^(65-F21) H22*( 1+6%)^(65-F22) 22 A21+1 23 A22+1 25 Amount saved SUM(D3:D23,13:122)

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