After graduating college, you start a job making $40,000. Your earnings grow at a constant growth rate of 3 percent per year. When you retire 40 years later, you are earning approximately:

a. 41,000.

b. 70,000.

c. 100,000.

d. 130,000.

Question

Business

Madeleine Fisher

15 April, 00:21

After graduating college, you start a job making $40,000. Your earnings grow at a constant growth rate of 3 percent per year. When you retire 40 years later, you are earning approximately:

a. 41,000.

b. 70,000.

c. 100,000.

d. 130,000.

+1

Answers (1)

Know the Answer?

Mila Summers · Answer 1

d. $130,000 approx

Explanation:

Data provided

Present value = $40,000

Growth rate = 3%

Number of years = 40%

The calculation of future value is shown below:-

FV = PV * (1 + i) ^n

Where, FV = future value of salary, PV = present value of salary, i = growth rate, n=years

= $40,000 * (1 + 3%) ^40

= $40,000 * (1.03) ^40

= $40,000 * 3.262037792

= $130,481.5117

= $130,000 approx

After graduating college, you start a job making $40,000. Your earnings grow at a constant growth rate of 3 percent per year. When you retire 40 years later, you are earning approximately:a. 41,000.b. 70,000.c. 100,000.d. 130,000.

After graduating college, you start a job making $40,000. Your earnings grow at a constant growth rate of 3 percent per year. When you retire 40 years later, you are earning approximately:

a. 41,000.

b. 70,000.

c. 100,000.

d. 130,000.