What should be amount of quarterly deposit in future dollars

Reference no: EM13234009

On her 23rd birthday a young female engineer decides to start saving toward building up a retirement fund that pays 8% annual interest, compounded quarterly (market interest rate). She feels that $600000 worth of purchasing power in today's dollars will be adequate to see her through her sunset years after her 63rd birthday. Assume a general inflation rate of 6% per year.

(a) If she plans to save by making 160 equal quarterly deposits, what should be the amount of her quarterly deposit in future dollars?

(b) if she plans to save by making end-of-the-year deposits, increasing by $1000 over each subsequent year, how much would her first deposit be in the future dollars?

Reference no: EM13234009

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