Arnie is 21 years old and earning $35 000 annually.If inflation averages three percent annually over his career,what will he have to earn at age 60 to equal his current pay?

Question

Quizplus · Accepted Answer

The correct answer is D.The formula for calculating the future value of a present sum is:FV = PV * (1 + r)^nwhere:FV is the future valuePV is the present valuer is the annual interest raten is the number of yearsIn this case, we have:PV = $35,000r = 3%n = 60 - 21 = 39Plugging these values into the formula, we get:FV = $35,000 * (1 + 0.03)^39FV = $35,000 * 2.613FV = $110,846Therefore, Arnie will have to earn $110,846 at age 60 to equal his current pay.

Arnie Is 21 Years Old and Earning $35 000 Annually