Larry, age 20, has decided to start saving for his retirement. He plans to deposit $9000 at the start of each of the next 5 years (first deposit made today at age 20). Larry plans to sit back and watch his money grow until he turns 65 (when he plans to retire). Sherry, also age 20, plans to wait until she has worked for a few years before she starts to save for her retirement. She plans to deposit $4000 a year into an account starting at age 25, making her 40th and final deposit at age 64. She will then retire at age 65. Sherry will deposit a total of $160,000 into her account over time, while Larry will only deposit a total of $45,000. As a result of this fact, Sherry claims she will have way more money at age 65 than Larry. To determine whether she is correct, calculate the accumulated value of each account at the beginning of each year, age 20 to 65, and then graph the results using the following annual rates of return that each person is assumed to earn each year until retirement.

(a) 5.50% (b) 7.22% (c) 8.75%
Who has more at age 65?

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