Question

I would like to retire in 2034 and to have a savings account that allows me to withdraw $30,000 per year, at the end of each year, beginning in 2034 and continuing through 2045. I found a fund that earns 4% annual return. To develop the necessary savings for my withdrawals, I intend to make equal deposits at the end of each of the years 2021 through 2033.

Two required considerations:

FIRST: Identify the details below that I need in order to determine the required balance in the savings fund at the end of 2033 in order to achieve my goal.

What table must I use to find the relevant factor? Enter corresponding number of your choice from below:

1. Future value of single-sum
2. Present value of single-sum
3. Future value of ordinary annuity
4. Present value of ordinary annuity

What is the interest rate to find the relevant factor?

What are the number of periods (n) to find the relevant factor?

What is the required balance in the savings fund at the end of 2033?

SECOND: Identify the details below that I need in order to determine the amount I must deposit at the end of each year during the deposit phase.

What table must I use to find the relevant factor?

1. Future value of single-sum
2. Present value of single-sum
3. Future value of ordinary annuity
4. Present value of ordinary annuity

What is the interest rate to find the relevant factor?

What are the number of periods (n) to find the relevant factor?

What is the amount I must deposit at the end of each year during the deposit phase?

Answer 1

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