You have 30 years left until retirement and want to retire with $1.2 million. Your salary is paid annually and you will receive $62,000 at the end of the current year. Your salary will increase at 3 percent per year, and you can earn a return of 9 percent on the money you invest. If you save a constant percentage of your salary, what percentage of your salary must you save each year?
You have 30 years left until retirement and want to retire with $1.2 million. Your salary is paid annually and you will receive $62,000 at the end of the current year. Your salary will increase at 3 percent per year, and you can earn a return of 9 percent on the money you invest. If you save a constant percentage of your salary, what percentage of your salary must you save each year?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 34P
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Transcribed Image Text:You have 30 years left until retirement and want to retire with $1.2 million. Your salary is paid annually and you will receive $62,000 at the end of the current year.
Your salary will increase at 3 percent per year, and you can earn a return of 9 percent on the money you invest. If you save a constant percentage of your salary,
what percentage of your salary must you save each year?
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