You are 20 years old and decide to start saving for your retirement. You plan to save $6,000 at the end of each year (se the first deposit will be one year from now), and will make the last deposit when you retire at age 68. Suppose you ear 5% per year on your retirement savings. a. How much will you have saved for retirement? b. How much will you have saved if you wait until age 32 to start saving (again, with your first deposit at the end of the year)?
You are 20 years old and decide to start saving for your retirement. You plan to save $6,000 at the end of each year (se the first deposit will be one year from now), and will make the last deposit when you retire at age 68. Suppose you ear 5% per year on your retirement savings. a. How much will you have saved for retirement? b. How much will you have saved if you wait until age 32 to start saving (again, with your first deposit at the end of the year)?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 44P
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Transcribed Image Text:You are 20 years old and decide to start saving for your retirement. You plan to save $6,000 at the end of each year (so
the first deposit will be one year from now), and will make the last deposit when you retire at age 68. Suppose you earn
5% per year on your retirement savings.
a. How much will you have saved for retirement?
b. How much will you have saved if you wait until age 32 to start saving (again, with your first deposit at the end of the
year)?
a. How much will you have saved for retirement?
The amount that you will have accumulated for retirement is $
(Round to the nearest dollar.)
b. How much will you have saved if you wait until age 32 to start saving (again, with your first deposit at the end of the
year)?
The amount that you will have accumulated for retirement is $
(Round to the nearest dollar.)
Expert Solution
Step 1
Here we will use the concepts and formulas of annuity. Annuity is a periodic amount of money being received or paid. The amount is usually the same every year or grows at a given rate.
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