Answer:
$1,924,410.40
Explanation:
Calculation to determine How much money will you have on the date of your retirement 40 years from today
First step is to calculate Next year’s salary
Next year’s salary = $72,500 (1 + ..037)
Next year’s salary = $75,182.50
Second step is to calculate Next year’s deposit
Next year’s deposit = $75,182.50(.05)
Next year’s deposit = $3,759.13
Third step is to find the Present Value (PV) using this formula
PV = C{[1 / (r– g)] – [1 / (r– g)] × [(1 + g) / (1 + r)]^t}
Let plug in the formula
PV = $3,759.13{[1 / (.09 – .037)] – [1 / (.09 – .037)] × [(1 + .037) / (1 + .09)]^40}
PV = $61,268.57
Now let find the Future value (FV) using this formula
FV = PV(1 + r)^t
Let plug in the formula
FV = $61,268.57(1 + .09)^40
FV = $1,924,410.40
Therefore How much money will you have on the date of your retirement 40 years from today is $1,924,410.40
