Question

74) Last year, you deposited $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? A) $2,408.28 less B) $4,331.30 less C) $1,218.46 less D) $1,666.67 less E) $3,628.09 less

Answer 1

Amount deposited less last year is given as=25000-25000*1.075^41/1.08^41
=4331.304456