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QUESTION 9 Suppose you plan to retire at age 70, and you want to be able...

QUESTION 9 Suppose you plan to retire at age 70, and you want to be able to withdraw an amount of $83,000 per year on each birthday from age 70 to age 100 (a total of 31 withdrawals). If the account which contains your savings earns 5.4% per year simple interest, how much money needs to be in the account by the time you reach your 70th birthday? (Answer to the nearest dollar.) Hint: This can be solved as a 30-year ordinary annuity plus one withdrawal at age 70, or as a 31-year annuity due.

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Answer #1

Calculate the present value of the amount as follows:

Therefore, the present value is $1,302,740.01.

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