Pre-Calculus Practice Problem 93

Pre-Calculus Practice Problem 93 - (1) What if the interest...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Unit 3, Activity 3, Saving for Retirement with Answers Blackline Masters, Advanced Math-Pre-Calculus Page 91 Comprehensive Curriculum, Revised 2008 Jack’s Retirement Fund Use the Future Value Formula : ( ) + = i i P F n 1 1 with P = $6000. I = 7% and n = 10 F = () + 07 . 1 07 . 1 6000 10 F = $82,898.69 Then, since Jack does not add to his account, use the exponential growth formula compounded annually. P = 82898.69(1.07) 32 P = $722,484.51 Bill’s Retirement Fund Bill will save $6000 per year for 32 years. Using the Future Value Formula : () 93 . 308 , 661 $ 07 . 1 07 . 1 6000 32 = + = F F Jack put $60,000 of his own money in the account. Bill put $192,000 in his account.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: (1) What if the interest rate averages 10% instead of 7%, how much will each have then? For Jack: He will have $95,624 in the account at age 33. At retirement he will have $ 2,018,983 in the account. For Bill: He will have $1,206,826 at retirement. (2) Suppose Jack retires at 62. How does his retirement fund compare to Bills who will retire at 65? At age 33 Jack will have $82,898.69 to invest. This will be worth $589,763. when he is 62. Below is the table from age 61 to 67....
View Full Document

Ask a homework question - tutors are online