QUESTIONS 19 THROUGH 32 RELATE TO QUANTITATIVE METHODS

20. A 24 year old is using the following information to plan her retirement:

Current age 24

Expected retirement age 68

Life expectancy 93

Current annual expenditures $30,000

Expected inflation rate of current

expenditures until retirement 3%

Expected return on investment 8%

She assumes her consumption expenditures will increase with the rate of inflation,

3 percent, until she retires. Upon retiring she will have end-of-year expenditures

equal to her consumption expenditure at age 68. The minimum amount that she

must accumulate by age 68 in order to fund her retirement is closest to:

A. $928,000.

B. $1,176,000.

C. $1,552,000.

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