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1. [3 points] Jason just accepted a job as an Operational Excellence Engineer with a local company. His starting salary is $74,000 per year. Jason plans to invest 8% of his annual salary each year in the Fidelity Growth Mutual Fund (consider this as a savings account earning 8% interest per year). Jason is also contracted to receive a 3% salary increase every year for the entirety of his employment. Jason plans to invest 8% of his annual salary in the mutual fund only for the next 35 years. If the mutual fund averages a 6% annual return over the 35 years:

Respuesta :

TomShelby

Answer:

Jason will retire with $ 864,355.3531

Explanation:

This is the case of a growing annuity at which the installment grow at a faster phase than interest. For the future value the formula wiil be:

[tex]\frac{(1+r)^n - q^n}{r - g}[/tex]

g 0.03

r 0.06

C 2,220

n 35

[tex]\frac{(1+0.06)^{30} - 1.03^{30}}{0.06 - 0.03}[/tex]

864355.3531