Question

1) You have begun saving for your retirement. Your starting salary is $60,000, and you invest 10% of your salary each year.
A) If the retirement plan has historically made 10% per year, how much will you have in your account after 40 years?
B) What will be your final contribution in year 40?

2)You have decided to purchase a house that needs quite a bit of work right away. You estimate the following yearly maintenance and upkeep costs:
Year Cost

0    $7500
1    $5500
2     $5500
3     $5500
4   $5200
5   $4900
6     $4600
7     $4300
8   $4000
9   $3700
10 $3400

If the interest rate is 8%, how money do you need to set aside when you purchase your house to pay for the first 10 years of maintenance and upkeep costs? Construct cash flow diagrams and show all your work. To receive full credit, you must use an arithmetic gradient.

Answer 1