Question

. Jacqueline Strauss, a 25- year- old personal loan officer at Second National Bank, under-stands the importance of starting early when it comes to saving for retirement. She has committed $ 3,000 per year for her retirement fund and assumes that she’ll retire at age 65.
a. How much will she have accumulated when she turns 65 if she invests in equities and earns 8 percent on average?
b. Jacqueline is urging her friend, Mike Goodman, to start his plan right away, too, because he’s 35. What would his nest egg amount to if he invested in the same manner as Jacqueline and he, too, retires at age 65? Comment on your findings.

Answer 1

i = .08
n = 40 years

a) amount = 3000 ( 1.08^40 - 1)/.08
= appr $777,170.00

b) change the exponent from 40 to 30

Answer 2

Jacqueline Strauss, a 25- year- old personal loan officer at Second National Bank, under-stands the importance of starting early when it comes to saving for retirement. She has committed $ 3,000 per year for her retirement fund and assumes that she’ll retire at age 65. a. How much will she have accumulated when she turns 65 if she invests in equities and earns 8 percent on average? b. Jacqueline is urging her friend, Mike Goodman, to start his plan right away, too, because he’s 35. What would his nest egg amount to if he invested in the same manner as Jacqueline and he, too, retires at age 65? Comment on your findings.

Answer 3

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