Question

Input Current age                      25 Retirement age               &

Input
Current age                      25
Retirement age                      60
Number of years until retirement                      35
Annual withdrawal ($)            120,000
Number of years to withdraw                      20
Interest rate (%) 6.00%
Employer contribution ($)                 5,000
Trust fund distribution ($)            150,000
Age at trust fund distribution                      45
Years until distribution                      20
Calculation & Output
Present value of withdrawals
Question 4
Annual deposit until retirement
Question 5
Present value in lump sum
Question 6
Value of employer's contribution at retirement:
Value of trust fund at retirement:
Amount required at retirement
Annual deposit until retirement
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Homework Answers

Answer #1

PV of withdrawals= 13,76,391/ (1+0.06)^35 = $179,075

Question 4

Annual deposit until retirement= Employers contribution+ Employees contribution

= 5000+ 5000

= $10,000

Question 5

So, present value= $144,982

Question 6

Value of employers contribution at retirement is calculated in excel with the formula =FV(rate, periods, pmt, pv)

Where, rate= 0.06, periods= 35, pmt= -5000, pv=0

FV= $557,174

Value of employers contribution at retirement= $557,174

Amount required at retirement= Value of withdrawals at retirement= 1,376,391

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