Problem:
Amy Parker a 22 year old Naval Architect is quick to admit that she does not plan to keep close tabs on her 401k. Amys contribution plus that of her employer, amounts to $2200 per year starting at the age of 23. Amy expects this amount will increase by $50 each year until she retires at the age of 62. What is the compound future value of Amy's 401k if it earns 7% per year.
Draw the cash flow, list equations used, and solve without using a financial calculator, as it will not be allowed on the exam.
Give details comprehensively as well as show all workings.