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1. Annuity. Suppose a friend wants to quit working in order to return to school for an MBA degree, and plans to save $7,800 per year, beginning immediately, into an account that pays 3% interest per year. Under these assumptions, how many years will it take your friend to accumulate $24,832?
2. Annuity Situation for Retirement. Suppose you want to retire early so you know you must start saving money. Thus, you have decided to save $5,000 at the end of each year, starting at age 40. You plan to retire as soon as you accumulate $750,000. If you can earn an average of 10 percent on your savings, how old will you be when you retire?
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