Labor Employment Relationship

Part I: Sally needs to choose between 2 health insurance plans. Assume Sally will use $4,500 worth of medical services this year. Is she better off choosing plan A or plan B? Briefly show your work and explain.

Plan A:

i. Monthly premium: $250

ii. Co-pay: $0

iii. Co-insurance (after deductible): 10%

iv. Deductible: $1,500

v. Max out-of-pocket: $4,000

Plan B:

vi. Monthly premium: $100

vii. Co-pay: $0

viii. Co-insurance (after deductible): 20%

ix. Deductible: $2,500

x. Max out-of-pocket: $8,000

Show your work here:

Part II:

(a) You are 20 years old and decide to open a retirement account. You contribute $1,000 every month for the next 35 years and invest it in the stock market (you buy indexes, not individual stocks!). Assuming you earned an annual growth rate of 10% on your investments, how much money do you think you’ll have saved when you are 55 years old?

(b) Now use the following online calculator to get the answer. Assume you are saving in a tax-deferred account and $0 starting assets: https://money.cnn.com/tools/savingscalc/savingscalc.html. (Links to an external site.)Links to an external site.

Answer II(b): Under the circumstances described above, I will have $__________________________ saved for retirement when I am 55 (you can report either the inflation-adjusted figure or the non-adjusted figure).

(c) Watch the following video: It's a Money Thing // Compound Interest Mind Bend (Links to an external site.)Links to an external site.

Answer III(c): What is one insight from the above video? _______________________________________________

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