Assume that you are 30 years old today, and that you are planning on retirement at age 65. You expect your salary to be $40,000 one year from now and you also expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 10%. The future value (FV) at retirement (age 65) of your savings is closest to ________.
A) $722,766
B) $1,445,531
C) $1,011,872
D) $1,590,084

Question

Quizplus · Accepted Answer

B) First deposit = 0.08 × $40,000 = $3200 $3200 × 11ea84dc_f57b_46f4_9a63_0f8cc1cfc220_TB1316_11_TB1316_11 11ea84dc_f57b_46f5_9a63_cdfb682cc108_TB1316_11_TB1316_11 (1 + 0.1)³⁵ = $1,445,531

Assume That You Are 30 Years Old Today, and That