(a)
The value of account after
Answer to Problem 10P
The value of account after
Explanation of Solution
Given:
Salary is
Interest rate for stock fund is
Calculation:
Make the table for cash flows.
Here, the salary is increasing every year by
Write the expression to calculate the salary for each year.
Here, the number of year is
Write the expression to calculate the saving of the employee.
Here, the saving by employee is
Write the expression to calculate the future worth.
Here the future worth in account is
Write the expression to calculate the saving of the employer.
Here, the saving by employee is
Write the expression to calculate the total savings.
Using the table, the future worth at the end of
Conclusion:
Thus, the value of account after
(b)
The value of employer’s matching fund.
Answer to Problem 10P
The value of the employer’s matching fund at the end of
Explanation of Solution
Given:
Salary is
Interest rate for stock fund is
Calculation:
Make the table for cash flows.
Here, the salary is increasing every year by
Write the expression to calculate the salary for each year.
Here, the number of years is
Write the expression to calculate the saving of the employee.
Here, the saving by employee is
Write the expression to calculate the future worth.
Here the future worth in account is
Write the expression to calculate the saving of the employer.
Here, the saving by employee is
Write the expression to calculate the total saving.
Using the table, the values of employer matching fund at the end of
Conclusion:
Thus, the value of employer matching fund at the end of
(c)
The value of account after
Answer to Problem 10P
The value of the account at the end of
Explanation of Solution
Given:
Salary is
Interest rate for stock fund is
Calculation:
Make the table for cash flows.
Here, the salary is increasing every year by
Write the expression to calculate the salary for each year.
Here, the number of years is
Write the expression to calculate the saving of the employee.
Here, the saving by employee is
Write the expression to calculate the future worth.
Here the future worth in account is
Write the expression to calculate the saving of the employer.
Here, the saving by employee is
Write the expression to calculate the total saving.
Using the table, the value of account at the end of
Conclusion:
Thus, the value of account at the end of
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