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 $1,100 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $1,600 every year for 30 years. Plan 3 starts after 20 years and puts away $3,600 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 6%. 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.) A. Plan 1 because it offers the highest future value. B. Plan 2 because it offers the highest future value. C. Plan 3 because it offers the highest future value. D. Any one of the three plans because they offer the same 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 $1,100 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $1,600 every year for 30 years. Plan 3 starts after 20 years and puts away $3,600 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 6%. 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.) A. Plan 1 because it offers the highest future value. B. Plan 2 because it offers the highest future value. C. Plan 3 because it offers the highest future value. D. Any one of the three plans because they offer the same future value.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Planet.
The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts
$1,100
away in your retirement account at the end of every year for
40
years. Plan 2 starts after 10 years and puts away
$1,600
every year for
30
years. Plan 3 starts after 20 years and puts away
$3,600
every year for the last
20
years of employment. All three plans guarantee an annual growth rate of
6%.
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.Plan 2
because it offers the highest future value.Plan 3
because it offers the highest future value.Any one of the three plans because they offer the same future value.
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