Question

Suppose that you start working for a company at age 25. You are offered two rather unlikely, but quite enticing, retirement plans from which you are allowed to choose one. [Round all answers to the nearest dollar.]Retirement plan 1: When you retire, you will receive $20,000 for each year of service.Retirement plan 2: When you start work, the company deposits $2500 into a savings account that is guaranteed to pay a yearly rate of 18%. When you retire, the account will be closed and the balance given to you.A. Determine the amount you would receive under plan 1, if you retired at age 55.

Answer 1

Answer:

Total amount= $600,000

Explanation:

Giving the following information:

Suppose that you start working for a company at age 25.

Option 1:

$20,000 for each year of work.

Number of years of service= 55 - 25= 30 years

Now, the total retirement plan:

Total amount= 30*20,000= $600,000