Question

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! :)

Homework Answers

Answer #1
Payment required = FV*r /[(1+r)^n -1]
Future value FV                            21,19,230.00
Rate per period r
Annual interest 6.0%
Number of payments per year 1
Interest rate per period 0.06/1=
Interest rate per period 6.000%
Number of periods n
Number of years 40
Periods per year 1
number of periods 40
Period payment = 2119230*0.06/ [(1+0.06)^40 -1]
=                                  13,693.48

Answer is

$13,693.48

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