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Assume you want to retire early at age 52. You plan to save using one of the following two strategies: (1) save $4,800 a year in an IRA beginning when you are 22 and ending when you are 52 (30 years) or (2) wait until you are 37 to start saving and then save $9,600 per year for the next 15 years. Assume you will earn the historic stock market average of 12% per year. (Click the icon to view the future value annuity factor table.) 5(Click the icon to view the future value factor table.) (Click the icon to view the present value annuity factor table.) (Click the icon to view the present value factor table.) Read the requirements. Requirement 1. How much out-of-pocket cash will you invest under the two options? Calculate how much out-of-pocket cash you will invest under the two options. Option 1: $ Option 2:$ 144,000 144,000 Requirement 2. How much savings will you have accumulated at age 52 under the two options? Calculate the total amount of savings that you will have accumulated at age 52 under the two options. (Round the savings to the nearest dollar amount.) 1,158,397 Option 1: $ Option 2: $ 357,885 Requirement 3. Explain the results. The strategy involving earlier savings grows substantially larger over time. This is due to the fact that the savings are invested sooner , so time does the work. Requirement 4. If you were to let the savings continue to grow for ten more years (with no further out-of-pocket investments), under each scenario, what will the investment be worth when you are age 62? Calculate the total amount of savings at age 62, with no further out-of-pocket investments, under each scenario. (Round the savings to the nearest dollar amount.) Requirement 4. If you were to let the savings continue to grow for ten more years (with no further out-of-pocket investments), under each scenario, what will the investment be worth when you are age 62? Calculate the total amount of savings at age 62, with no further out-of-pocket investments, under each scenario. (Round the savings to the nearest dollar amount.) 3,597,805 Option 1: $ Option 2: $

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