Scenario 21-3
Scott knows that he will ultimately face retirement. Assume that Scott will experience two periods in his life, one in which he works and earns income, and one in which he is retired and earns no income. Scott can earn $250,000 during his working period and nothing in his retirement period. He must both save and consume in his work period with an interest rate of 10 percent on savings.
-Refer to Scenario 21-3. Assume that Scott decides to consume $100,000 in the work period. How much money will he have available for consumption in his retirement period?
A)$100,000
B)$110,000
C)$150,000
D)$165,000

Question

Quizplus · Accepted Answer

Scott decides to consume $100,000 during his working period, leaving him with $150,000 to save ($250,000 - $100,000). With an interest rate of 10 percent, his savings will grow to $165,000 by his retirement period ($150,000 * 1.10).

Scenario 21-3 Scott Knows That He Will Ultimately Face Retirement. Assume That