Amount to be deposited
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Last year, you deposited $25,000 into a retirement savings account at a fixed rate of 7.5 percent. Today,you could earn a fixed rate of 8 percent on a similar type account. However, your rate is fixed and cannot be adjusted. how much less could you have deposited last year if you could have earned a fixed rate of 8 percent and still have the same amount as you currently will when you retire 40 years from today?
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Solution Summary
The solution explains how to determine the difference in amount to be deposited given an increase in interest rate.
Solution Preview
We first calculate the amount at the end of 40 years with a rate of 7.5%
We use the FVIF table to get the FV ...
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