Use the Information for the Question(s)below

question 46

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 future value at retirement (age 65) of your savings is closest to:

• A)$497,530.
• B)$928,895.
• C)$1,263,236.
• D)$108,000.

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Definitions:

Accrued Interest

The amount of interest that has accumulated on a loan or bond over a specific period but has not yet been paid.

Semiannually

Occurring twice a year; every six months.

Accrued Interest

The interest that has accumulated on a financial obligation over a period of time but has not yet been paid.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.