1 answer

Suppose you wish to retire forty years from today. You determine that you need $50,000 per...

Question:

Suppose you wish to retire forty years from today. You determine that you need $50,000 per year once you retire, with the first retirement funds withdrawn one year from the day you retire. You estimate that you will earn 6% per year on your retirement funds and that you will need funds up to and including your 25th birthday after retirement. How much do you need to save each year over the next 40 years to achieve your goal?


Answers

First we need to find the PV of the desired retirement annuity at retirement:

PVA = Annuity x [{1 - (1 + r)-n} / r]

= $50,000 x [{1 - (1.06)-25} / 0.06]

= $50,000 x [0.7670 / 0.06] = $50,000 x 12.7834 = $639,167.81

Now, we can find the required annual saving to reach this PVA, which will be treated as FVA for this calculation as this value is in the future, 40 years from now:

Annuity = [FVA x r] / [(1 + r)n - 1]

= [$639,167.81 x 0.06] / [1.0640 - 1]

= $38,350.07 / 9.2857 = $4,130.01

.

Similar Solved Questions

2 answers
What do call the curved surface of water in a measuring cylinder?
What do call the curved surface of water in a measuring cylinder?...
1 answer
Lo a participation if you aren't coming to class) Due September 30th Pretend you inherited $150,000...
lo a participation if you aren't coming to class) Due September 30th Pretend you inherited $150,000 are trying to decide between buying a home outright (cash) with the money or investing it in the stock market earning an 8% return and renting a place for the next 20 years for $800 a month. Assum...
1 answer
20. In a two-phase three-wire system if the phase currents are 1-4.3+j7.9 A and I, 2.4...
20. In a two-phase three-wire system if the phase currents are 1-4.3+j7.9 A and I, 2.4 + j6.5 A, what is the value of the current in the common wire? A. 1.9 +j14.4 A B. 2.2 + j5.5 A C. 4.1 +j12.2 A D. 6.7 +j1.4 A 4...
1 answer
Exercise A3-11 Practice with Tables Use Future Value Tables and Present Value Tables, or your calculator,...
Exercise A3-11 Practice with Tables Use Future Value Tables and Present Value Tables, or your calculator, to complete the requirements below. Required: Round your answers to the nearest cent. a. Determine the future value of a single cash flow of $5,000 that earns 7% interest compounded annually for...
1 answer
Please show directions of e_r and e_theta ICW 24 a) The 3 kg slider A fits...
Please show directions of e_r and e_theta ICW 24 a) The 3 kg slider A fits loosely in the smooth 45° slot in the disk, which rotates in a horizontal plane about its center O. If A is held in position by a cord secured to point B, determine the tension Tin the cord for a constant rotational ve...
1 answer
The economic burden of a tax is borne mostly by: buyers if demand is highly elastic....
The economic burden of a tax is borne mostly by: buyers if demand is highly elastic. O buyers if demand is highly ir plastic. buyers in all cases. sellers in all cases,...
1 answer
Save -Homework: Ch. 6 Assignment Score: 0 of 12 pts 8 of 16 (13 complete) Question...
Save -Homework: Ch. 6 Assignment Score: 0 of 12 pts 8 of 16 (13 complete) Question 8, E6-27A (book/static) HW SC59.69%, 59.69 of 100 pts Question Help Melody Leigh, owner of Broadway Floral operates a local chain of floral shops Each shop has its own delivery van Instond of charging a flat delivery ...
1 answer
If an organism's diploid number is 12, what will its haploid number be?
If an organism's diploid number is 12, what will its haploid number be?...
1 answer
Find the electric field vector at point P for the charge configurations shown below. Simplify your...
Find the electric field vector at point P for the charge configurations shown below. Simplify your final answer. a) 9 + a b a -9 b) b 9 a -9 a...
1 answer
Perform the following steps to verify by substitution that C and D are solutions to equation...
Perform the following steps to verify by substitution that C and D are solutions to equation A and B, respectively. Partial^2E/Partial x^2 = epsilon0 mu0 Partial^2E/Partial t^2 E = E_max cos(kx = omega t) Equation A Equation C Partial^2B/Partial x^2 = epsilon0 mu0 Partial^2B/Partial t^2 B = B_max co...
1 answer
Office, your un you teach patients about first du u respond to emergencies, the better equipped...
office, your un you teach patients about first du u respond to emergencies, the better equipped they will to handle accidental injuries and illnesses. Emergencies in ing as a medical assistant. Patients may Cum facility with an acute illness or an injury. You may have to handle a phone call from a p...
1 answer
What is the connection between infection and delirium? what is the main things nurse should watch...
what is the connection between infection and delirium? what is the main things nurse should watch for?...
1 answer
REQUIRED. with over 17,000 species described, lichens are dual organisms. Address the following questions: a. b....
REQUIRED. with over 17,000 species described, lichens are dual organisms. Address the following questions: a. b. c. What are lichens? Which type of fungi is generally associated with lichens? What are the habitats of lichens? Why are they important to ecological succession?...
1 answer
Juanita's Delivery Service Fill out the grey area Juanita's Delivery Service Trial Balance 30-Sep-13 $ 5,000...
Juanita's Delivery Service Fill out the grey area Juanita's Delivery Service Trial Balance 30-Sep-13 $ 5,000 3000 800 600 7000 $ Cash Accounts Receivable Supplies Prepaid Insurance Delivery Equipment Accounts Payable Common Stock Retained Earnings-Beg Balance Dividends Delivery Fees Wages E...
1 answer
7. Draw the lewis dot structure for the following. Indicate whether they are polar or nonpolar:...
7. Draw the lewis dot structure for the following. Indicate whether they are polar or nonpolar: a. CCL b. BCI: c. NF3 d. CS2...