McGraw-Hill Connect >O ezto.mheducation.com/hm.tpx E connect INANCE W4 Ch4 TVM-D

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McGraw-Hill Connect >O ezto.mheducation.com/hm.tpx E connect INANCE W4 Ch4 TVM-DCF 20. 100 points You have 30 years left untl retirement and want to retre with $2.9 million Your salary is paid annually, and you will receive $79,000 at the end of the current year. Your salary will increase at 3 percent per year, and you can eam a return of 9 percent on the money you invest If you save a constant percentage of your salary, what percentage of your salary must you save each year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g, 32.16.) of salary References eBook & Resources

Explanation / Answer

future value of a growing annuity = first payment/0.09-0.03 *(1.09^30 - 1.03^30) = 2,900,000

first payment = 16,051.0445

% of salary = 16,051.0445/79,000 = 20.32%

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