You would like to begin saving for your retirement that starts 20 years from now. To...

Transcribed Image Text:

You would like to begin saving for your retirement that starts 20 years from now. To do this, you will invest $850 per year in Account Alpha and $250 per year in Account Beta over the next 20 years, with the first saving exactly 1 year from now. The Annual Percentage Rate (APR) of Account Alpha is expected to be 11% compounded annually, and the Annual Percentage Rate (APR) of Account Beta is expected to be 6% compounded annually. a) Draw a timeline to illustrate the cash flow of your 20 years retirement savings for Account Alpha and Account Beta separately. [Hint: Cash Flow occurs yearly] (5 marks) b) How much will you have in Account Alpha and Account Beta after 20 years (i.e., at the beginning of your retirement) respectively? And how much have you saved in total for your retirement after 20 years? (10 marks) You would like to begin saving for your retirement that starts 20 years from now. To do this, you will invest $850 per year in Account Alpha and $250 per year in Account Beta over the next 20 years, with the first saving exactly 1 year from now. The Annual Percentage Rate (APR) of Account Alpha is expected to be 11% compounded annually, and the Annual Percentage Rate (APR) of Account Beta is expected to be 6% compounded annually. a) Draw a timeline to illustrate the cash flow of your 20 years retirement savings for Account Alpha and Account Beta separately. [Hint: Cash Flow occurs yearly] (5 marks) b) How much will you have in Account Alpha and Account Beta after 20 years (i.e., at the beginning of your retirement) respectively? And how much have you saved in total for your retirement after 20 years? (10 marks)

Answer rating: 100% (QA)

SOLUTION Timeline for Retirement Savings Account Alpha Year 1 850 Year 2 850 Year 3 850 Year 20 850 ... View the full answer