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1. Mateo has nothing saved for retirement. Mateo wants to receive 66,100 dollars each year for...

1. Mateo has nothing saved for retirement. Mateo wants to receive 66,100 dollars each year for 8 years during retirement. The first of these payments will be received in 6 years. Mateo can earn a return of 9.62 percent per year. How much does Mateo need to save each year for 6 years to have exactly enough to meet his retirement goal if he makes his first savings contribution in 1 year and all savings contributions are equal?

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Answer #1

Present Value of Annuity required at the beginning of retirement

=

where r = 9.62%

n = 8 years

=

= 357,570.287143

Now Future Value that is required at the beginning of the retirement is 357,570.287143 Therefore,

Future value of Annuity =

where r = 9.62%

n = 6 years

357,570.287143 =

357,570.287143 = Periodic Payment * 7.64196506372

Periodic Payment = 357,570.287143 / 7.64196506372

Periodic Payment = $46,790.37

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