Question

Today is Derek’s 25th birthday. Derek has been advised that he needs to have $3,491,566.00 in...

Today is Derek’s 25th birthday. Derek has been advised that he needs to have $3,491,566.00 in his retirement account the day he turns 65. He estimates his retirement account will pay 5.00% interest. Assume he chooses not to deposit anything today. Rather he chooses to make annual deposits into the retirement account starting on his 30.00th birthday and ending on his 65th birthday. How much must those deposits be?

Homework Answers

Answer #1

Solution

Future value of annuity due=Annuity payment*(((1+r)^n-1)/r)*(1+r)

Here Annuity payment= Annual deposits to be made in account

r-intrest rate -5%

n-number of periods=65-30=35

Future value of annuity due=Amount needed on 65th birthday in account= $3,491,566.

Putting values in formula

3491566=Annuity payment*((((1+.05)^35)-1)/.05)*(1+.05)

Solving we get

Annuity payment=$36816.76(Annual payments he must make)

If you are satisfied with answer,please give a thumbs up

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Today is Derek’s 25th birthday. Derek has been advised that he needs to have $2,570,420.00 in...
Today is Derek’s 25th birthday. Derek has been advised that he needs to have $2,570,420.00 in his retirement account the day he turns 65. He estimates his retirement account will pay 5.00% interest. Assume he chooses not to deposit anything today. Rather he chooses to make annual deposits into the retirement account starting on his 30.00th birthday and ending on his 65th birthday. How much must those deposits be?
Today is Derek’s 25th birthday. Derek has been advised that he needs to have $2,119,230.00 in...
Today is Derek’s 25th birthday. Derek has been advised that he needs to have $2,119,230.00 in his retirement account the day he turns 65. He estimates his retirement account will pay 6.00% interest. Assume he chooses not to deposit anything today. Rather he chooses to make annual deposits into the retirement account starting on his 26.00th birthday and ending on his 65th birthday. How much must those deposits be? Answer in currency and round to 2 decimal places please! :)
today is dereks 25th birthday derek has been advised that he needs to have $2,407,780 in...
today is dereks 25th birthday derek has been advised that he needs to have $2,407,780 in his retirement account the day he turns 65. He estimates his retirement account will pay 7% interest .Assume he chooses not to deposit anything today. Rather he chooses to make annual deposits into the retirement account starting on his 29th birthday and ending on his 65th birthday. How much must those deposits be?
Today is Derek’s 25th birthday. Derek has been advised that he needs to have $2,928,661.00 in...
Today is Derek’s 25th birthday. Derek has been advised that he needs to have $2,928,661.00 in his retirement account the day he turns 65. He estimates his retirement account will pay 5.00% interest. Assume he chooses not to deposit anything today. Rather he chooses to make annual deposits into the retirement account starting on his 28.00th birthday and ending on his 65th birthday. How much must those deposits be? Submit Answer format: Currency: Round to: 2 decimal places. unanswered not_submitted...
Suppose you deposit $2,688.00 into an account today. In 14.00 years the account is worth $3,748.00....
Suppose you deposit $2,688.00 into an account today. In 14.00 years the account is worth $3,748.00. The account earned ____% per year. Today is Derek’s 25th birthday. Derek has been advised that he needs to have $2,656,763.00 in his retirement account the day he turns 65. He estimates his retirement account will pay 10.00% interest. Assume he chooses not to deposit anything today. Rather he chooses to make annual deposits into the retirement account starting on his 28.00th birthday and...
Category Prior Year Current Year Accounts payable 3,119.00 5,956.00 Accounts receivable 6,975.00 8,909.00 Accruals 5,779.00 6,033.00...
Category Prior Year Current Year Accounts payable 3,119.00 5,956.00 Accounts receivable 6,975.00 8,909.00 Accruals 5,779.00 6,033.00 Additional paid in capital 19,546.00 13,016.00 Cash ??? ??? Common Stock 2,850 2,850 COGS 22,805.00 18,431.00 Current portion long-term debt 500 500 Depreciation expense 1,049.00 1,025.00 Interest expense 1,262.00 1,122.00 Inventories 3,074.00 6,738.00 Long-term debt 16,942.00 22,407.00 Net fixed assets 75,935.00 73,976.00 Notes payable 4,021.00 6,509.00 Operating expenses (excl. depr.) 19,950 20,000 Retained earnings 35,600.00 34,487.00 Sales 46,360 45,961.00 Taxes 350 920 What is...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 73.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 73.0 when he fully retires, he will wants to have $3,423,684.00 in his retirement account. He he will make contributions to his retirement account from his 26th birthday to his 65th birthday. To reach his...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 73.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 73.0 when he fully retires, he will wants to have $3,310,550.00 in his retirement account. He he will make contributions to his retirement account from his 26th birthday to his 65th birthday. To reach his...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 73.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 73.0 when he fully retires, he will begin to make annual withdrawals of $115,102.00 from his retirement account until he turns 93.00. He he will make contributions to his retirement account from his 26th birthday...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 72.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 72.0 when he fully retires, he will begin to make annual withdrawals of $153,143.00 from his retirement account until he turns 93.00. After this final withdrawal, he wants $1.55 million remaining in his account. He...