Question

Given the values below, how much will you have saved by retirement?
Input Data
77,500.00$
Beginning Salary
2.75%
Salary increase projection
10.0%
Savings deposit (portion of pay to be saved)
7.75%
Interest earning projection
40
Years until retirement

Answer 1

Future worth of geometric series = A *[(1+i)^n - (1+g)^n]/(i-g)

Future worth of retirement account = 77500*0.1 *[(1+0.0775)^40 - (1+0.0275)^40]/(0.0775-0.0275)

= 7750*[(1.0775)^40 - (1.0275)^40]/(0.05)

= 7750*336.8261947

= 2610403.009 ~ 2610403