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How much will he have saved

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Question - Mike is 30 years old and his salary next year will be $40, 000. Mike forecasts that his salary will increase at a steady rate of 5% per year until his retirement at age 60.

(a) If the interest rate is 8% per year, what is the PV of these future salary payments?

(b) If Mike saves 5% of his salary each year and invests these savings at an interest rate of 8%, how much will he have saved by age 60?

Reference no: EM132731748

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