Question

You just turned 28 and are now seriously planning for your retirement. You wish to retire...

You just turned 28 and are now seriously planning for your retirement. You wish to retire two years earlier than the mandatory retirement age of 65. You hope to be able to make end-of-month withdrawals from your retirement account of P25,000 per month for a 30-year period after that.

Your plan is to fund your retirement by making monthly deposits between now and when you retire. The initial monthly deposit will be made at the end of the coming month.

How much monthly deposit should you make if you can earn 12 percent per annum in your retirement account? (Ignore taxes.)


Show your computations.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The first step is to calculate the size of the retirement fund. The size of the fund is calculated using present value of annuity equation.

Size of retiirement fund = $2,430,458.28

Using the future value of annuity equation, we can find out how much monthly deposit should be made.

Solving for A in the above equation, we get

The amount of monthly deposit to be made = $ 377.93

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Marie just turned 28 and are now seriously planning for her retirement. Marie wishes to retire...
Marie just turned 28 and are now seriously planning for her retirement. Marie wishes to retire two years earlier than the mandatory retirement age of 65. She hopes to be able to make end-of-month withdrawals from her retirement account of $25,000 per month for a 30-year period after that. Marie's plan is to fund her retirement by making monthly deposits between now and when she retires. The initial monthly deposit will be made at the end of the coming month....
You just decided to begin saving for retirement. You will make deposits of $1,000 per month...
You just decided to begin saving for retirement. You will make deposits of $1,000 per month into a retirement account that earns 8.00% p.a. The first deposit is made today and the last deposit will be made when you retire exactly 30 years from today. (Note: you make 361 total monthly deposits into your retirement account.) You will begin to make withdrawals from the account the first month after you retire. If you plan to live an addition 25 years...
You just decided to begin saving for retirement. You will make deposits of $1,000 per month...
You just decided to begin saving for retirement. You will make deposits of $1,000 per month into a retirement account that earns 8.00% p.a. The first deposit is made today and the last deposit will be made when you retire exactly 30 years from today. The day you retire you will buy an RV for $240,000. You will begin to make withdrawals from the account the first month after you retire. If you plan to live an addition 25 years,...
You decide to open a retirement account at your local bank that pays 9%/year/month (9% per...
You decide to open a retirement account at your local bank that pays 9%/year/month (9% per year compounded monthly). For the next 20 years, you will deposit $600 per month into the account, with all deposits and withdrawals occurring at month’s end. On the day of the last deposit, you will retire. Your expenses during the first year of retirement will be covered by your company’s retirement plan. As such, your first withdrawal from your retirement account will occur on...
Question 1 You decide to open a retirement account at your local bank that pays 7%/year/month...
Question 1 You decide to open a retirement account at your local bank that pays 7%/year/month (7% per year compounded monthly). For the next 20 years, you will deposit $400 per month into the account, with all deposits and withdrawals occurring at month’s end. On the day of the last deposit, you will retire. Your expenses during the first year of retirement will be covered by your company’s retirement plan. As such, your first withdrawal from your retirement account will...
You are planning to make monthly deposits of $190 into a retirement account that pays 7...
You are planning to make monthly deposits of $190 into a retirement account that pays 7 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 20 years?
You are planning to make monthly deposits of $50 into a retirement account that pays 10...
You are planning to make monthly deposits of $50 into a retirement account that pays 10 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 18 years? Multiple Choice $31,529.57 $360,337.93 $30,028.16 $27,359.50 $28,526.75
You want to withdraw $8,500 per month in real terms for 25 years when you retire....
You want to withdraw $8,500 per month in real terms for 25 years when you retire. You plan to retire in 35 years, and expect to earn an 11 percent nominal effective annual return before you retire. You will make monthly deposits to fund your retirement account. Immediately after you make your last deposit, you plan to withdraw $35,000 in real terms to take an around the world trip. You also wish to leave your grandchildren $750,000 in real terms...
You wish to save money to provide for retirement. Beginning one year from now, you will...
You wish to save money to provide for retirement. Beginning one year from now, you will begin depositing a annual fixed amount into a retirement savings account that will earn 8% annually. You will make 30 such deposits. Then, one year after making the final deposit, you will withdraw $100,000 annually for 20 years (no more deposits). You wish to have $50,000 left in the account after the 20-year retirement period ends (note that this final cash flow has the...
You just turned 20 years old and want to retire when you turn 65. You expect...
You just turned 20 years old and want to retire when you turn 65. You expect to live for 25 years after retirement and want to withdraw $100,000 per year in retirement, starting on your 65th birthday. You expect to earn a return of 6% on your investments every year. What is the present value (as of your 65th birthday) of the withdrawals you expect to make? How much money should you save each year if you make the first...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT