Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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STORY (very similar to what was shown in class): YOU and your BEST FRIEND just graduated from college. You both went to the same college and majored in the same field. You both started working at age 22 in the same workplace. Each of you decided upon a different course of action for your respective retirement plans. Assuming each plan earned 10% and both of you decided to retire at age 60, calculate the earnings each plan generated. Upon the advice of your Personal Finance professor (hint, hint), YOU began immediately putting $6,000 per year in an individual retirement account (IRA) and $19,500 per year in a 401K. You contributed for a total of 15 years. After 15 years, you made no further contributions into the account. Your BEST friend, did not contribute to their retirement accounts until they turned 30, even though you both worked in the same place and received the same plans. They had planned to simply invest $6000 and $19,500 each year for the remaining years until they retired at age 60.
How much did your BEST FRIEND accumulate in their retirement account with interest?
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