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Question: You are saving for retirement in 40 years. You deposit $20,000 in a bank account today that pays 2.5% interest, compounded semiannually. You leave those funds on deposit until you retire. You also contribute $5,000 a year to a pension plan for 20 years and then you stop making contributions to the fund. You leave your money in the pension fund until you retire. The pension plan grows at a rate of 5% a year. How much will you have when you retire?

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