I need help on how to start this and solve it.

timer Asked: Sep 15th, 2015

Question description

1)  You are celebrating your 35th birthday today and want to start saving for your retirement at age 65.  You want to be able to withdraw $15,000 per year on each birthday for 12 years following your retirement; the first withdrawal will be on your 66th birthday.  You intend to invest your money in an account that pays 9% per year.  You want to make equal, annual payments on each birthday into this account. 

a.   If you start making these deposits on your 36th birthday and continue until you are 65, what amount must be deposited annually to reach your goal?

b.  Suppose you just inherited a large sum of money.  Rather than making equal annual payments, you decide to make one lump-sum payment on your 36th birthday to cover your retirement needs.  What amount do you need to deposit?

c.  Suppose your employer will contribute $250 into the account every year.  In addition, you expect a $10,000 distribution from a family trust fund on your 55th birthday, which you will also put into the retirement account.  What amount do you need to deposit annually now to meet your retirement goal?

Tutor Answer

(Top Tutor) Studypool Tutor
School: Boston College
Studypool has helped 1,244,100 students
flag Report DMCA
Similar Questions
Hot Questions
Related Tags

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors