Suppose You Are 22 and Wish to Retire at 65

question 78

Multiple Choice

Suppose you are 22 and wish to retire at 65. Which of the following options will result in a greater future value at retirement? Option 1 is to invest $15,000 per year for eight years, and then leave it
Untouched for 35 years. Option 2 is to deposit $7,500 at the end of each year into an investment for
43 years. Both accounts earn 9% per year.

• A) Option 1 is better with a value of $3,599,024
• B) Option 1 is better with a value of $3,377,024
• C) Option 2 is better with a value of $3,905,602
• D) Option 2 is better with a value of $3,675,988
• E) Option 2 is better with a value of $3,776,405

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Definitions:

Rectangle

A four-sided flat shape with straight sides where every interior angle is a right angle (90 degrees).

Square Meters

A metric unit of area equal to the area of a square measuring one meter on each side.

Maximum Height

The highest point or peak that an object or function reaches.

Horizontal Distance

The measurement of distance between two points along a straight line on the horizontal plane.