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Pre-Calculus Practice Problem 93

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

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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.
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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 Bill’s 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....
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