PFIN 2nd Edition by Lawrence Gitman ,Michael Joehnk,Randall Billingsley

Exercise 1

Julie Emerson, a 25-year-old personal loan officer at First National Bank, understands the importance of starting early when it comes to saving for retirement. She has committed $3,000 per year for her retirement fund and assumes she'll retire at age 65.
a. How much will she have accumulated when she turns 65 if she invests in equities and earns 8% on average?
b. Julie is urging her friend, Robert Lamb, to start his plan right away, too, because he's 35. What would his nest egg amount to if he invested in the same manner as Julie and he, too, retires at age 65? Comment on your findings.