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 $1,500 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $2,000 every year for 30 years. Plan 3 starts after 20 years and puts away $4,000 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 10%. 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?
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 $1,500 away in your retirement account at the end of every year for 40 years. Plan 2 starts after 10 years and puts away $2,000 every year for 30 years. Plan 3 starts after 20 years and puts away $4,000 every year for the last 20 years of employment. All three plans guarantee an annual growth rate of 10%. 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?
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
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
$1,500
away in your retirement account at the end of every year for
40
years. Plan 2 starts after 10 years and puts away
$2,000
every year for
30
years. Plan 3 starts after 20 years and puts away
$4,000
every year for the last
20
years of employment. All three plans guarantee an annual growth rate of
10%.
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?
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