Georgia McBeal is trying to save for her retirement. She believes she can earn 10% on average each year on her retirement fund. Assume that at the beginning of each of the next 40 years, Georgia will allocate x dollars to her retirement fund. If at the beginning of a year Georgia has y dollars in her fund, by the end of the year, it will grow to 1.1y dollars. How much should Georgia allocate to her retirement fund each year to ensure that she will have $1 million at the end of 40 years? What key factors are being ignored in this analysis of the amount saved for retirement?
Georgia McBeal is trying to save for her retirement. She believes she can earn 10% on average each year on her retirement fund. Assume that at the beginning of each of the next 40 years, Georgia will allocate x dollars to her retirement fund. If at the beginning of a year Georgia has y dollars in her fund, by the end of the year, it will grow to 1.1y dollars. How much should Georgia allocate to her retirement fund each year to ensure that she will have $1 million at the end of 40 years? What key factors are being ignored in this analysis of the amount saved for retirement?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 35P
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Georgia McBeal is trying to save for her retirement. She believes she can earn 10% on average each year on her retirement fund. Assume that at the beginning of each of the next 40 years, Georgia will allocate x dollars to her retirement fund. If at the beginning of a year Georgia has y dollars in her fund, by the end of the year, it will grow to 1.1y dollars. How much should Georgia allocate to her retirement fund each year to ensure that she will have $1 million at the end of 40 years? What key factors are being ignored in this analysis of the amount saved for retirement?
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