solution

According to the Seton Hall Career Center
(https://www.shu.edu/career-center/career- outcomes.cfm), finance majors that
graduated from the Stillman School of Business in 2019 earned an average salary
of $58,910 per year their first year after graduation. Assume that is the
salary that you will earn following graduation at your first job when you
graduate. If you earn a 3% raise, what will your salary be your second year on
the job? What will your salary be in your 5th year?

1. If you start working when
   you are 20 years old, how much money what will your salary be when you are
   65 (45 years later)?
2. According to financial
   planners, the average retiree requires approximately 70% of their last
   year’s working salary (answer to #2) each year to live comfortably in
   retirement. Assume that you want to earn a fixed amount of interest each
   year in retirement. Your goal is to spend only the interest and still live
   comfortably. And, you want to earn the interest forever so that what
   remains can be passed onto your children, donated your favorite charity,
   or donated in honor of your favorite finance professor. That is, you want
   to earn a fixed amount, each year, for an indefinite amount of time. If
   you retire at 65 and can earn a 6% return, how much must you have saved to
   earn the required amount of interest?
3. If you die when you are 90
   years old, how much money will be left to bequeath?
4. What if instead of saving
   for someone else, you expect to live until you are 90 years old at which
   point you plan to have spent all your savings. If you can earn 6% per
   year, how much must you have saved up at 65 to earn a 70% of your
   pre-retirement salary (answer to #2) each year until you are 90? How would
   your savings have to change if you can only earn 5% per year in
   retirement?