Use the Information for the Question(s)below

question 31

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 (PV) (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:

Profit-maximizing

A strategic approach aimed at increasing a firm's profits to the highest possible level given its production costs and market conditions.

Purely Competitive

A market configuration where numerous small businesses produce the same goods and face no entry or exit obstacles.

Pure Competition

A market structure characterized by a large number of buyers and sellers, homogeneous products, and the absence of barriers to entry or exit for firms.