Question

Molly Lincoln, a 25-year-old personal loan officer at First National Bank, understands the importance of starting early when it comes to saving for retirement. She has committed $2,000 per year for her retirement fund and assumes that she'll retire at age 65.

1. How much will Molly have accumulated when she turns 65 if she invests in equities and earns 10 percent on average? Round your answer to the nearest dollar.
   $  
   
2. Molly is urging her friend, Isaac Stein, to start his plan right away, too, because he's 35. What would his nest egg amount to if he invested in the same manner as Molly and he, too, retires at age 65? Round your answer to the nearest dollar.
   
   Nest egg amount at 4% = $  
   
   Nest egg amount at 10% = $  
   
   Comment on your findings.
   

Answer 1

a)

b)

&

Future value of savings increases with increase in interest rate and vice-versa.