Question

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Emily Dorsey's current salary is $63,000 per year, and she is planning to retire 15 years from now. She anticipates that her annual salary will increase by $3,000 each year ($63,000 the first year, to $66,000 the second year, $69,000 the third year, and so forth), and she plans to deposit 10% of her yearly salary into a retirement fund that earns 6% interest compounded daily. What will be the amount of interest accumulated at the time of Emily's retirement? Assume 365 days per year. The amount of interest accumulated at the time of Emily's retirement will be $76 thousand. (Round to the nearest whole number.)

Answer 1

This problem can be solved using the formula FV-PV*(1+r)n where FV Future Value Present Value PV = Rate of Interest for a period r = Number of Periods n =

Deposit Amount Number of Rate of Maturity Interest Interest per Amount (FV) Year Salary (10% of years to Portion Salary (PV) day r Maturity(n) (e)-(b)*(1+(d)) ^(365*c)) $15,494.35 $ 9,194.35 $15,286.97$ 8,686.97 $15,051.19 $ 8,151.19 $14,791.04 $ e)-(b) (a) (b)-(a*10%) (c) (d) 63,000.00 $ 66,000.00 $ 69,000.00 $ $ 72,000.00 $ 75,000.00 $ 78,000.0o $ $ 6%/365 1 6,300.00 15 $ 6%/366 2 6,600.00 14 $ 6%/367 3 6,900.00 13 6%/368 4 7,200.00 12 7,591.04 $ 14,510.16 $ $14,211.83 $ 6,411.83 13,899.04 $ 5,799.04 $13,574.49 $5,174.49 $13,240.61 $4,540.61 $12,899.58$3,899.58 $12,553.38 $3,253.38 $12,203.75 $ 2,603.75 $11,852.28 $ $11,500.35 $ $ 6%/369 5 7,500.00 11 7,010.16 6%/370 6 7,800.00 10 81,000.00 $ $ 84,000.00 $ $ 87,000.00 $ 90,000.00 $ 93,000.00 $ 96,000.00 $ 99,000.00 $ $ 102,000.00 $ $105,000.00 $ 7 6%/371 8,100.00 6%/372 8 8,400.00 8 6%/373 8,700.00 7 $ 6%/374 10 9,000.00 6 6%/375 11 9,300.00 5 $ 6%/376 12 9,600.00 4 $ 6%/377 13 9,900.00 3 1,952.28 6%/378 14 10,200.00 2 1,300.35 6%/379 649,23 15 10,500.00 1 11,149.23 Total of Interest Maturity 76,218.25 on C + EA st LO O

The amount of interest accumulated at the time of Emily's retirement will be $76 thousands Note This problem has been solved on the assumption that Emily Dorsey Deposits her portion of salary at the beginning of the year