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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