Question

A software engineer planaing for his retirement will deposit 15\% of his salary each yoar into a high technology stock fund. If his salary this year is $150,000 and he expects his savy to increase 6% each year. How much will he have in the fund after Isyrs if the fund earns 18% per year? (Draw cash flow dragm prease) Show formua used for Ine years calcworron

Answer 1

To calculate the amount the software engineer will have in the fund after I years, we can use the formula for compound interest. The principal amount is 15% of the software engineer's salary, the interest rate is 18%, and the number of periods is I years.

Step-by-step explanation:

To calculate the amount the software engineer will have in the fund after Is years, we can use the formula for compound interest.

The formula is A = P(1 + r)^n, where A is the future value, P is the principal amount, r is the interest rate per period, and n is the number of periods.

In this case, the principal amount is 15% of the software engineer's salary, which is 0.15 * $150,000 = $22,500.

The interest rate per period is 18%, and the number of periods is I years. Using the formula, the amount in the fund after I years will be:

A = $22,500(1 + 0.18)^I