Use the Information for the Question(s)below

question 42

Multiple Choice

Use the information for the question(s) below.
Assume that you are 30 years old today and that you are planning on retirement at age 65.Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work.To save for your retirement,you plan on making annual contributions to a retirement account.Your first contribution will be made on your 31st birthday and will be 8% of this year's salary.Likewise,you expect to deposit 8% of your salary each year until you reach age 65.Assume that the rate of interest is 7%.
-The present value (at age 30) of your retirement savings is closest to:

• A)$87,000.
• B)$108,000.
• C)$46,600.
• D)$75,230.

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Definitions:

Occupations

Various forms of employment or professions in which individuals engage to earn a living.

Complementary

Products or services that are used together, where the use of one increases the value or demand for the other.

Productivity

The measure of the efficiency of production, often quantified as the ratio of outputs produced to inputs used in the production process.

Output Effect

The output effect is the impact on total revenue generated by selling an additional unit of a product or service, assuming the price remains constant.