Future value. You are a new employee with the Metro Daily Planet. The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts $1,400 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $2,900 every year for 30 years. Plan 3 starts after 20 years and puts away $4,400 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 8%. a. Which plan should you choose if you plan to work at the Planet for 40 years? b. Which plan should you choose if you plan to work at the Planet for only the next 30 years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 years? d. Which plan should you choose if you plan to work at the Planet for only the next 10 years? e. What do the answers in parts (a) through (d) imply about savings? a. Which plan should you choose if you plan to work at the Planet for 40 years? (Select the best response.) Plan 1 because it offers the highest future value
Future value. You are a new employee with the Metro Daily Planet. The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts $1,400 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $2,900 every year for 30 years. Plan 3 starts after 20 years and puts away $4,400 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 8%. a. Which plan should you choose if you plan to work at the Planet for 40 years? b. Which plan should you choose if you plan to work at the Planet for only the next 30 years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 years? d. Which plan should you choose if you plan to work at the Planet for only the next 10 years? e. What do the answers in parts (a) through (d) imply about savings? a. Which plan should you choose if you plan to work at the Planet for 40 years? (Select the best response.) Plan 1 because it offers the highest future value
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 44P
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