Question

Edna is 30 and plans to retire at 60. That's 30 years of saving for retirement. Edna will make a deposit into the retirement savings account once a year at the end of the year. Each deposit will be the same amount. Once she retires, Edna will use the proceeds, plus interest to live for 30 years beyond retirement. Edna wants to plan for a retirement pay of $150,000 at the end of each year. The discount rate is 10%. Some time-value-of-money factors are available: Present value of an ordinary annuity, 30 years, 10% 9.426914 Future value of an ordinary annuity, 30 years, 10% 164.494023 What yearly deposit should Edna make from age 30 to 60 to achieve her goal?

$150,000

$26,174

$14,140

$8,596

Answer 1