You are a new employee with the Metro Daily Planet. The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts ​$1,500 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away ​$2,000 every year for 30 years. Plan 3 starts after 20 years and puts away $4,000 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 10​%.   a.  Which plan should you choose if you plan to work at the Planet for 40 ​years? b. Which plan should you choose if you plan to work at the Planet for only the next 30 ​years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 ​years?

Question
You are a new employee with the Metro Daily
Planet.
The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts
​$1,500
away in your retirement account at the end of every year for
40
years. Plan 2 starts after 10 years and puts away
​$2,000
every year for
30
years. Plan 3 starts after 20 years and puts away
$4,000
every year for the last
20
years of employment. All three plans guarantee an annual growth rate of
10​%.
 
a.  Which plan should you choose if you plan to work at the Planet for
40
​years?
b. Which plan should you choose if you plan to work at the Planet for only the next
30
​years?
c. Which plan should you choose if you plan to work at the Planet for only the next
20
​years?
d. Which plan should you choose if you plan to work at the Planet for only the next
10
​years?
e. What do the answers in parts​ (a) through​ (d) imply about​ savings?

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Retirement Planning

Future value and Present value

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