There is this cartoon Futurama that tells a story of a guy named Fry. The character was accidentally frozen on December 31, 1999 and wakes up back to life on December 31, 2999. In season 1 episode 6 Fry visits his old bank. The teller informs him that he had on his account 93 cents in 1999. However, with an average yearly interest of 2.25% over the period of 1000 years it gives $4.3 billion.
Read about compound interest and use Julia to answer a few questions.
Is Fry really a billionaire?
According to this page (careful it’s in Polish) the inflation in Poland over the period 2020-2024 was: 3.4%, 5.1%, 14.4%, 11.4%, and 3.6%. If on December 31, 2019 my monthly salary was $10,000 (I wished) then how much I would have to earn in January 2025 to be able to buy the same amount of goods like in 2019?
Imagine that on January 1, 2020 I opened a bank deposit for 5 years with a yearly interest rate of 6%. Given the inflation rates from the question 2 would I make any real profit on January 1, 2025?
An average Polish male, aka Jan Kowalski, retires at the age of 65, while his life expectancy at birth is 74 years. Jan starts his first job at the age of 20 and earns $3,000 a month. However, since he had heard that the pension a person receives is equal to 50% of their last salary, he decided to save $200 monthly (a bit less than 7% of his earnings). Once, he retires he’ll take the missing 50% from the pile of money that he saved so that quality of his life will not change.
Assume that: 1) there is no inflation; 2) Jan’s salary is constant throughout his lifetime; 3) he pays $2,400 into his savings account at the beginning of each year; 4) the account gives him 2% yearly. Tell roughly how long will the money last on the retirement?