Savings Comparison: Contribution or Interest Earned
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36. Last year, you deposit $25,000 into a retirement savings account at a fixed rate of 7.5 %. Today, you could earn a fixed rate of 8% 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% and still have the same amount as you currently will when you retire 40 years from today?
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Solution Summary
In this Solution the author provides and completes the calculations necessary to arrive at the answer to the given question.
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Step1: Calculate the Future value of deposit $25,000 into a retirement savings account at a fixed rate of 7.5 % for 40 years
Future value= Present value *(1+rate of ...
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