SOLUTION: Lorenzo and Michael each decide to invest in a mutual fund to save for retirement. They each choose a mutual fund that has had an average return of 5.6% over the last decade. There

SOLUTION: Lorenzo and Michael each decide to invest in a mutual fund to save for retirement. They each choose a mutual fund that has had an average return of 5.6% over the last decade. There

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Question 1131107: Lorenzo and Michael each decide to invest in a mutual fund to save for retirement. They each choose a mutual fund that has had an average return of 5.6% over the last decade. There is no guarantee that the mutual fund will continue to earn this same rate, but it can be used as an estimate of future returns. Use the information given below to estimate how much each man will have when he retires. Round to the nearest dollar. Hint: The amount earned is how much they have without the initial investment.
Lorenzo invests $3,000 when he is 25.
Michael invests $5,000 when he is 45.
Both plan to retire at 65.
How much will they each have at retirement? How much have they each earned? Round your answer to the nearest dollar.
Answer by solver91311(24713) (Show Source): You can put this solution on YOUR website!

The future value

of an initial investment of

for

years at

% annual interest compounded

times per year is given by:

For the first guy,

,

,

and

For the second guy,

,

,

and

Then, the amount earned is

You can do your own arithmetic.

John

My calculator said it, I believe it, that settles it

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