Reference no: EM133110412
1. David, age 25, plans to invest $3,000 real dollars per year into his investment account. If the nominal rate of interest is 10% and the rate of inflation is 3%, how much money in nominal dollars will he have at the end of 30 years? Assume that the annual contributions occur at the end of each year.
A) $663,106
B) $493,482
C) $542,830
D) $643,806
E) $218,454
2. Mr. Hope, 65, has recently retired. He will spend $45,000 in the first year, and plans to increase his annual spending at the rate of 2% per year. If the rate of interest is 6%, and he does not expect to live beyond age 85, how much money does he need today in order to support his post- retirement expenses? Assume that all annual expenses occur at the beginning of each year.
A) $603,759
B) $547,115
C) $639,984
D) $516,146
E) $900,000
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