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Bart and Lisa Simpson both work at the Springfield DMV and have decided to start saving for retirement, which is 40 years away. They’ll both receive a 7 percent annual return on their investment over the next 40 years. Lisa invests $4,500 per year at the end of each year only for the first 10 years of the 40-year period. Bart doesn’t start saving for 10 years and then saves $4,500 per year at the end of each year for the remaining period of time

Question 1

How much will Lisa have when she retires? Note: this question requires you to do two sets of calculations. Do not round until the end.

Question 2

How much will Bart have when he retires?

Question 3

How much would Bart need to save each year if he wants to “catch-up” to Lisa (how much will he need to save so that he has the same amount at retirement as Lisa)?

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Jean Keeling
Jean KeelingLv2
28 Sep 2019

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Monthly savings $

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