Imagine that you graduate from college and your first employer offers a retirement fund that is optional for you to join. After one year on the job, you can contribute a monthly sum to the fund and earn an average return equal to the Standard and Poor's 500, which is 10%. Assume that you are 22 when you graduate (and 23 when you start contributing), and you plan on working until you are 67, and you can contribute $500 per month to the fund. 

A. How much would you accumulate by the time you retire, i.e. at 67? 

B. If you wait until you are 30 to begin contributing to the fund, how much will your monthly contributions have to be for you to obtain the same future savings as in Part A?

Answer rating: 100% (QA)

To calculate the accumulated amount by the time you retire at age 67 we can use the future value of ... View the full answer