Question: Ark saves a fixed percentage of his salary throughout each year. This year he saved $1500. For the next 5 years, he expects his salary to increase at an 8% annual rate, and he plans to increase his savings at the same 8% annual rate. He invests his money evenly twice a year in the stock market. There thus will be twelve midyear investments and twelve end of year investments. Solve the problem by using the geometric gradient factor.
1. How much will the investment be worth at the end of the six years if they increase in the stock market at a 10% annual rate?