Question

4. After retirement, you expect to live for 25 years. You would like to have $75,000...

4. After retirement, you expect to live for 25 years. You would like to have $75,000 income each year. How much should you have saved in your retirement account to receive this income, if the annual interest rate is 9 % per year? (Assume that the payments start on the day of your retirement.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
This can be solved using the Present value of annuity due formula
Present value of annuity due is = P+[P*(1-(1+r)^-(n-1))/r]
"P" is Annual income for each year = $ 75,000/.
"r" is Annual interest rate = 9%
"n" is No of years = 25
Present value of annuity due is = Savings
Present value is = 75000+[75000*(1-(1+0.09)^-(25-1))/0.09]
Present value is = 75000+[75000*9.706612]
Present value is = 75000+[727995.88]
Present value is = $ 802,995.88/.
Hence $ 802,996/. have saved in retirement account
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
FV and PV of an Annuity Suppose you expect to live for 20 years after retiring...
FV and PV of an Annuity Suppose you expect to live for 20 years after retiring at age 65. You would like to save enough money to have $30,000 per year to live on during your retirement. Currently, at age 30, you would like to start saving a fixed amount each year to fund this retirement plan. How much do you need to save each year to reach your goal? (Assume all annuity payments are end-of-period, ordinary annuity payments, and...
You plan to retire 37 years from now. You expect that you will live 25 years...
You plan to retire 37 years from now. You expect that you will live 25 years after retiring. You want to have enough money upon reaching retirement age to withdraw $110,000 from the account at the beginning of each year you expect to live, and yet still have $2,500,000 left in the account at the time of your expected death (62 years from now). You plan to accumulate the retirement fund by making equal annual deposits at the end of...
You and your wife are making plans for retirement. You plan on living 25 years after...
You and your wife are making plans for retirement. You plan on living 25 years after you retire and would like to have $95,000 annually on which to live. Your first withdrawal will be made one year after you retire and you anticipate that your retirement account will earn 15% annually. Do not round intermediate calculations. Round your answers to the nearest cent. What amount do you need in your retirement account the day you retire? $ Assume that your...
You expect to retire in 25 years. After you retire, you want to be able to...
You expect to retire in 25 years. After you retire, you want to be able to withdraw $4,500 from your account each month for 30 years. If your account earns 9% interest compounded monthly, how much will you need to deposit each month until retirement to achieve your retirement goals? (Round to the nearest cent.)
You are planning to save for retirement over the next 25 years. To do this, you...
You are planning to save for retirement over the next 25 years. To do this, you will invest $500 per month in a retirement account. The rate of return for the retirement account is expected to be 9 percent per year. After you retire, you expect that the account will have an annual return of 6 percent. How much can you withdraw each month from your account assuming a 20-year withdrawal period during retirement?
You plan to retire 34 years from now. You expect that you will live 22 years...
You plan to retire 34 years from now. You expect that you will live 22 years after retiring. You want to have enough money upon reaching retirement age to withdraw $140,000 from the account at the beginning of each year you expect to live, and yet still have $2,500,000 left in the account at the time of your expected death (56 years from now). You plan to accumulate the retirement fund by making equal annual deposits at the end of...
How to solve using BA II Calculator? Assume that today you are tuning 25 years old,...
How to solve using BA II Calculator? Assume that today you are tuning 25 years old, and you would like to start your retirement account. You plan to invest $25,000 per year with your first deposit being made today. You are investing in a retirement fund that will return 5.6%. You plan to retire at the age of 70 and expect to live 25 years after your retirement. Assuming this information, how much can you spend each year after you...
You would like to have enough money saved to receive $200,000 per year after retirement so...
You would like to have enough money saved to receive $200,000 per year after retirement so that you and your family can lead a good life for 30 years (from age 65 to 95). You will make your first withdraw of $200,000 at the end of year when you are 65. If you will be 35 years old when you graduate and plan on making savings contributions at the end of your first year out of school, how much would...
. You are 35 years old today and are considering your retirement needs. You expect to...
. You are 35 years old today and are considering your retirement needs. You expect to retire at age 65 and your actuarial tables suggest that you will live to be 100. You want to move to the Bahamas when you retire. You estimate that it will cost you $ 300,000 to make the move (on your 65th birthday) and that your living expenses will be $30,000 a year (starting at the end of year 66 and continuing through the...
By the end of this year you would be 35 years old and you want to...
By the end of this year you would be 35 years old and you want to plan for your retirement. You wish to retire at the age of 65 and you expect to live 20 years after retirement. Upon retirement you wish to have an annual sum of $50,000 to supplement your social security benefits. Therefore, you opened now your retirement account with 7% annual interest rate. At retirement you liquidate your account and use the funds to buy an...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT