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A civil engineer planning for her retirement places 9% of her salary each year into a high-technology stock fund. If her salary this year (end of year 1) is $150,000 and she expects her salary to increase by 2% each year, what will be the future worth of her retirement fund after 14 years provided it earns 5% per year?The future worth of her retirement fund will be ___ $.

Respuesta :

TomShelby

Answer:

$ 297,203.78

Explanation:

We have to solve for the future value of a growing annuity considering the following data:

[tex]C_0 \times \frac{(1+r)^n-(1+g)^n}{r-g}  = FV[/tex]

grow rate(g) 0.02

interest rate(r) 0.05

Cuota 13,500

the first cuota is 9% of the 150,000 salary

time (n) 14 years

[tex]13,500 \times \frac{(1+0.05)^{14}-(1+0.02)^{15}}{0.05 - 0.02}  = FV[/tex]

FV =  297,203.78

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