Marie's current salary as a Systems Engineer is $100,000 per year. She's planning to place 18% of her salary each year in a mutual fund. She expects a 4% salary increase each year for the next 16 years of employment. If the mutual fund will average a rate of return of 12% per year, what will be the amount of interest accumulated at the time of her retirement in 16 years?

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.