You've recently graduated from the Chang school but have already started planning for your retirement. Your...
You've recently graduated from the Chang school but have already started planning for your retirement. Your current job pays you $45,000/year and you expect this to increase by 5% annually. As part of your retirement plan you intend to make an annual deposit into an account starting on your 31st birthday (8% of $45,000) with the last contribution on your 65th. birthday, at which point you hope to retire. You expect to deposit 8% of your salary every year. If today is your 30th birthday then what is the present value of your retirement account if you assume it earns 7% per annum?
Homework Answers
Present value of the retirement account is given
as=45000*8%/1.07*(1-(1.05/1.07)^35)/(1-(1.05/1.07))
=87003.68207
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