document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1135960>Question 1135960</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Suppose that you start working for a company at age 25. You are offered two rather unlikely, but quite enticing, retirement plans from which you are allowed to choose one. [Round all answers to the nearest dollar.]\r<BR>\n" );
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document.write( "Retirement plan 1: When you retire, you will receive $16,000 for each year of service.\r<BR>\n" );
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document.write( "Retirement plan 2: When you start work, the company deposits $2500 into a savings account that is guaranteed to pay a yearly rate of 18%. When you retire, the account will be closed and the balance given to you.\r<BR>\n" );
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document.write( "A. Determine the amount you would receive under plan 1, if you retired at age 55.\r<BR>\n" );
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document.write( "B. Determine the amount you would receive under plan 1, if you retired at age 65.\r<BR>\n" );
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document.write( "C. Determine the amount you would receive under plan 2, if you retired at age 55.\r<BR>\n" );
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document.write( "D. Determine the amount you would receive under plan 2, if you retired at age 65 </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #753705 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=753705\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> if you retire at 55, plan 1 wins.\r<BR>\n" );
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document.write( "if you retire at 65, plan 2 wins.\r<BR>\n" );
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document.write( "the following graph shows why.\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2019/030401.jpg\" alt=\"$$$\" >\r<BR>\n" );
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document.write( "plan 1 is straight line growth.\r<BR>\n" );
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document.write( "16000 * 30 = 480,000 and 16000 * 40 = 640,000.\r<BR>\n" );
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document.write( "plan 2 is exponential.\r<BR>\n" );
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document.write( "2500 * 1.18^30 = 358,426.596 rounded to 3 decimal places and 2500 * 1.18^40 = 1,875,945.862 rounded to 3 decimal places.\r<BR>\n" );
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document.write( "the growth in plan 1 stays at 16000 a year.\r<BR>\n" );
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document.write( "the growth in plan 2 increases each year because it's the balance in the previous year + 18% time the balance in the previous year.\r<BR>\n" );
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document.write( "as the balance gets bigger, the growth each year gets bigger.\r<BR>\n" );
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document.write( "after 30 years, it really starts taking off.\r<BR>\n" );
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