Mr. Jones is scheduled to retire on his 65th birthday. He was born January 1, 1946 and was hired by his present employer on January 1, 2001, with a starting salary of $50,000 per year. His employer makes contributions to a pension fund on the first day of January, April, July and October until he retires. Each contribution is 1% of his annual salary. The pension fund earns a nominal annual rate of interest of 8% compounded quarterly. Smith's salary is scheduled to increase by 8% every January 1 starting in 2002. The final employer contribution is on October 1, 2010. Find the value of Smith's pension fund on his 65th birthday.
Mr. Jones is scheduled to retire on his 65th birthday. He was born January 1, 1946 and was hired by his present employer on January 1, 2001, with a starting salary of $50,000 per year. His employer makes contributions to a pension fund on the first day of January, April, July and October until he retires. Each contribution is 1% of his annual salary. The pension fund earns a nominal annual rate of interest of 8% compounded quarterly. Smith's salary is scheduled to increase by 8% every January 1 starting in 2002. The final employer contribution is on October 1, 2010. Find the value of Smith's pension fund on his 65th birthday.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Mr. Jones is scheduled to retire on his 65th birthday. He was born January 1, 1946 and was hired by his present employer on January 1, 2001, with a starting salary of $50,000 per year. His employer makes contributions to a pension fund on the first day of January, April, July and October until he retires. Each contribution is 1% of his annual salary. The pension fund earns a nominal annual rate of interest of 8% compounded quarterly. Smith's salary is scheduled to increase by 8% every January 1 starting in 2002. The final employer contribution is on October 1, 2010. Find the value of Smith's pension fund on his 65th birthday.
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