Question

3. When she turned 35 years of age, Susan realized that she needed to prepare for her retirement. She started by investing $1,000 at the end of the year. She continued saving $1,000 at the end of each year for a total of 10 years. She then doubled her savings to $2,000 per year for the following 10 years. At this point, realizing that retirement was getting uncomfortably close, she doubled her savings again to $4,000 per year for an additional 10 years. Susan plans to retire at the end of the 30th year after she turns 65 years old. How much money will she have accumulated in savings at the time of her retirement? The average rate of return over the 30 years was 10% per year compounded annually. [Ans.: S253,640)

Answer 1

- Annual Investment to retirement Fund -$1000 for the first loyears - $2000 for the next 10 years -$4000 for the next 10 years Total time peruid = 30 years calculate the future value at the teñe of reedeen retirement of the average reate of return = 10% interest = 10% fo V- 1000 (FIA, 10%, 10) (FIP, 10%,201 + 2000 (FIA,10%.10) (F/P, 10%., 10) +4000 (HA,10 %.10) For= lovo (15.93742) (6.72750) + 2000 (15.93742 (2.59374) + Hood (15.93742) For=107,218.99+82,675.05t _63749.68 E = 253, 643.72 Ans - 253 640 (Rounded to hearest value) CSC -Scanned with CamScanner