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3 March, 12:28

Joe's starting salary is $80,000 per year. He plans to put 10% of his salary each year into a mutual fund. He expects his salary to increase by 5% per year for the next 30 years, and then retire. If the mutual fund will average 7% annually over the course of his career, how much money will he have to retire on?

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  1. 3 March, 13:06
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    FV = $1,930,661.48

    Explanation:

    Giving the following information:

    Joe's starting salary is $80,000 per year. He plans to put 10% of his salary each year into a mutual fund. He expects his salary to increase by 5% per year for the next 30 years, and then retire. If the mutual fund will average 7% annually

    We need to use the following formula:

    FV = {A*[ (1+i) ^n-1]}/i

    A = annual deposit

    FV = {8000*[ (1.12^30) - 1]}/0.12 = $1,930,661.48
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