Michael just graduated from college and has his first job. His salary is that of an entry-level employee, so he has to budget his money carefully. However, he does understand the need to save money for the future.
a. Assume that he deposits 600 at the end of each year for 10 years into an investment account earning 7%. He then stops making deposits and uses the money instead for house and car payments. How much will be in the investment account at the end of the 10-year period?
b. Assume Michael decides to keep the investment but does not make any additional contributions. How much will be in the account when he retires, after working for another 25 years?
c. Assume that Michael does not begin saving until he has worked 20 years. If he plans to retire in 15 years from that time, now much would he have to invest at the end of each year, in an account earning 7%, to equal the balance in the account in part B?
d. Calculate the total amount of cash that Michael would pay in under parts A and B combined and the amount he would pay inunder part
C. Why is there a difference?