Homework answers / question archive / Lucia Gomez, a flight attendant from Kent, Ohio, is thinking about jump-starting her retirement savings plan by investing the $50,000 gift that her elderly uncle gave her

Lucia Gomez, a flight attendant from Kent, Ohio, is thinking about jump-starting her retirement savings plan by investing the $50,000 gift that her elderly uncle gave her

Finance

Share With

Lucia Gomez, a flight attendant from Kent, Ohio, is thinking about jump-starting her retirement savings plan by investing the $50,000 gift that her elderly uncle gave her. She also wants to invest $3,000 a year for the next 25 years for retirement. Lucia knows little about investments and does not seem to have a big desire to learn.

1. If Lucia’s $50,000 is invested in a standard investment account and her $3,000 yearly is invested in a tax-sheltered account, with each account growing at 8 percent annually for 25 years, how much money will she have accumulated in each account? She is in the 25 percent tax bracket (Hint: Adjust the lump-sum investment for 25 percent taxes).