Assume that you are 30 years old today and that you are planning on retirement at age 65. Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be mad on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 7%. The present value (at age 30) of your retirement savings is closest to: OA. $87,000. OB. $46,600. O C. $75,230. OD. $108.000.
Assume that you are 30 years old today and that you are planning on retirement at age 65. Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be mad on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 7%. The present value (at age 30) of your retirement savings is closest to: OA. $87,000. OB. $46,600. O C. $75,230. OD. $108.000.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 39P
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Transcribed Image Text:Use the information for the question(s) below.
Assume that you are 30 years old today and that you are planning on retirement at age 65. Your current salary is $45,000 and you expect your salary to increase at a
rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made
on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of
interest is 7%.
The present value (at age 30) of your retirement savings is closest to:
O A. $87,000.
OB. $46,600.
OC. $75,230.
O D. $108,000.
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