Assume That You Are 30 Years Old Today, and That

Multiple Choice

Assume that you are 30 years old today, and that you are planning on retirement at age 65. You expect your salary to be $40,000 one year from now and you also expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 10%. The future value (FV) at retirement (age 65) of your savings is closest to ________.

A) $722,766
B) $1,445,531
C) $1,011,872
D) $1,590,084