Suppose that you start working for a company at age 25. You…
Suppose that you start working for a company at age 25. You are offered two rather unlikely, but quite enticing, retirement plans from which you are allowed to choose one: Retirement plan 1: When you retire, you will receive $5,000 for each year of service, i.e., $5,000 for each and every year you worked for the company. Retirement plan 2: When you start work, the company deposits $25,000 into a savings account that is guaranteed to pay interest yearly at the rate of 6%. When you retire, the account will be closed and the entire balance will be given to you. a. Determine the amount you would receive under plan 1, if you retired at age 55. ${#1} (Do not enter commas!) b. Determine the amount you would receive under plan 1, if you retired at age 65. ${#2} (Do not enter commas!) c. Determine the amount you would receive under plan 2, if you retired at age 55. ${#3} (Do not enter commas!) d. Determine the amount you would receive under plan 2, if you retired at age 65. ${#4} (Do not enter commas!) e. Based on your answers to parts a through d, which plan should you choose if you plan to retire at age 55? {#5} f. Based on your answers to parts a through d, which plan should you choose if you plan to retire at age 65? {#6}
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