4. a) According to the Rule of 72, how many years will it take to double your money assuming a 6% annual rate of return%?
.
WHO WANTS TO BE A MILLIONAIRE?
b) Lori, age 22, earns $50,000 per year and she invests 6% of her salary, $3,000 annually, through her employer sponsored 401(k) retirement account. Because her employer also contributes $0.50 for every dollar she contributes, Lori is saving $4,500 each year ($3,000 + $1,500). Even if she never increases her 401(k) contributions, how much money will she have in the account after 40 years if she earns an 8% annual return? (assume no pay increases for simplicity) -- *** Hint: use Appendix A-3 in text. Please show work