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explain in detail
and draw the crash flow diagram (b) On Sophie's 30th birthday, she plans to make 10 annual
payments ( $1,000 of each payment) into her employer's retirement plan. The first payment will
be made at the end of year 1. After making these 10 annual payments, Sophie then stops making
payments into her plan and keeps her money in the savings plan untouched for 25 more years.
On the other hand, on Peter's 40th birthday, he plans to make annual payments ($1,000 of each
payment) into his employer's retirement plan. He will make the first payment on his 41st
birthday and continue these payments until he is 65 years old. If Sophie's and Peter's retirement
plans earn interest of 6% per year, how much will they have accumulated (principal plus interest)
when they reach 65 years old?

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explain in detail and draw the crash flow diagram (b) On Sophie.pdf

  • 1. explain in detail and draw the crash flow diagram (b) On Sophie's 30th birthday, she plans to make 10 annual payments ( $1,000 of each payment) into her employer's retirement plan. The first payment will be made at the end of year 1. After making these 10 annual payments, Sophie then stops making payments into her plan and keeps her money in the savings plan untouched for 25 more years. On the other hand, on Peter's 40th birthday, he plans to make annual payments ($1,000 of each payment) into his employer's retirement plan. He will make the first payment on his 41st birthday and continue these payments until he is 65 years old. If Sophie's and Peter's retirement plans earn interest of 6% per year, how much will they have accumulated (principal plus interest) when they reach 65 years old?