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Chapter 14 Financial Planning Exercise 1 Calculating amount available at retirement

Olivia Stephens, a 30-year-old personal loan officer at Third National Bank, understands the importance of starting early when it comes to saving for retirement. She has designated $2,000 per year for her retirement fund and assumes she'll retire at age 65.

1. How much will she have if she invests in CDs and similar money market instruments that earn 4 percent on average? Round your answer to the nearest dollar.

   $

2. How much will she have if instead she invests in equities and earns 8 percent on average? Round your answer to the nearest dollar.

   $

3. Olivia is urging her friend, Brian Snyder, to start his plan right away because he's 40. What would his nest egg amount to if he invested in the same manner as Olivia and he, too, retires at age 65? Round your answer to the nearest dollar.

   Nest egg amount at 4%	$
   Nest egg amount at 8%	$

   Comment on your findings.

   The input in the box below will not be graded, but may be reviewed and considered by your instructor.