Brainly Ginny character avatar
Hi! I'm Ginny, your AI Tutor.
I’ll answer all your questions and give you explanations to help you learn!
Ask me a question to get started!
A civil engineer planning for her retirement places 10% of her salary each year into a high-technology stock fund. If her salary this year (end of year 1) is $160,000 and she expects her salary to increase by 3% each year, what will be the future worth of her retirement fund after 15 years provided it earns 7% per year?
Brainly Ginny character avatar
AI-generated answer
To calculate the future worth of the civil engineer's retirement fund after 15 years, we need to follow these steps:

1. Calculate the amount she invests each year:
- 10% of her salary this year: 10% * $160,000 = $16,000

2. Determine her salary for each year using the 3% annual increase:
- Year 1: $160,000
- Year 2: $160,000 * 1.03 = $164,800
- Continue this pattern for 15 years to find her salary each year.

3. Calculate the total amount she invests over 15 years:
- Since she invests $16,000 each year, multiply this by the number of years (15) to get the total amount invested.

4. Calculate the future value of her investments after 15 years:
- Use the future value formula: FV = PV * (1 + r)^n, where FV is the future value, PV is the present value, r is the interest rate, and n is the number of periods.
- In this case, the interest rate is 7% and the number of periods is 15 years.

5. Add the future value of her investments to any potential earnings from the high-technology stock fund to get the total future worth of her retirement fund after 15 years