With the photo attached, answer the following question e). Based on the assessment of your calculations, what would you say is the main reason for there to be such a big difference between both retirement values at age 65
With the photo attached, answer the following question e). Based on the assessment of your calculations, what would you say is the main reason for there to be such a big difference between both retirement values at age 65
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter14: Planning For Retirement
Section: Chapter Questions
Problem 2FPE
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Question
With the photo attached, answer the following question
e). Based on the assessment of your calculations, what would you say is the main reason for there to be such a big difference between both retirement values at age 65?
Transcribed Image Text:Case Scenario:
Two best friends, Ben and Arthur, who grew up together in the same
neighbourhood, are the same age and they graduated from high school together. At
age 19, both friends started working at different companies but earning similar
salaries.
Ben started investing $2,000 at the beginning of each year from his salary for
retirement, at a rate of 12%, while Arthur decided to "enjoy life" with his salary.
After 8 years (age 27) the friends had a discussion about their financial happenings
over the period. Their explanation for doing what they did with money was so
convincing to the other.
Arthur changed his focus and wanted to do more with his income, so he started
investing $2,000 for retirement at the beginning of each year at 12% until he retired
at
age
65
(39
years
later).
Ben realized he was not having as much fun as Arthur and decided to stop investing
for just a few years. However,he never managed to invest another dollar towards
retirement at age 65. Ben did not touch any of his previous investment and it
continued to earn interest over the next 39 years.
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