Question

On your 23rd birthday you decide to invest 10% ($4,500) of your salary in 7% per year. You will continue to make annual deposits equal until you retire 40 years from now (at age 62). You expect yo during these 40 years. How much money would you have accumulat you retire? Show your work. nue to make annual deposits equal to this 10% of your annual salary ow (at age 62). You expect your salary to increase by 4% each year money would you have accumulated in your mutual fund when 70 P:? F ?

Answer 1

Investment = 10% of salary = 4500 Interest of mutual fund = 7% Annual deposity will be done for 40 years Salary increases by 4% each year. So, the annual deposits also increase by 4%. How much money you have accumulate in the fund when you retine? This is the case of geometric greadient. Use the following formula to calculate Present - worak P. W = A fi- 1 753" CIFT) ig = ,9=4% Powi Asop T-C170.04) (T+0.07) TSV F 0 07 0.04 p.w=101,907.9 How calculate future value at year 62 FV = Plith Fu= 101,907.9 C140.07) F = 1,526,015. 5 retitie will Money accumulated when you be $ 1,526, 015.5.