Tom currently has $50,000 in savings intended for his retirement in 10 years. He expects to live for 15 years postretirement and he would like to withdraw $110,000 at the end of each of his retirement years. If he can invest his money in an account that pays 10%, compounded annually, how much does he need to contribute to his account every year to ensure he meets his retirement goals?
Question 28 options:
$95,392.63 

$65,884.09 

$60,634.38 

$49,609.55 

$44,359.84 
Present value of post retirement amount = Annuity * [1  1 / (1 + r)^{n}] / r
Present value of post retirement amount = 110,000 * [1  1 / (1 + 0.1)^{15}] / 0.1
Present value of post retirement amount = 110,000 * [1  0.23939] / 0.1
Present value of post retirement amount = 110,000 * 7.60608
Present value of post retirement amount = 836,668.7457
Future value of savings = Present value * (1 + r)^{n}
Future value of savings = 50,000 (1 + 0.1)^{10}
Future value of savings = 50,000 * 2.59374
Future value of savings = $129,687.123
Remaining amount = 836,668.7457  129,687.123 = 706,981.6227
Future value = Annuity * [(1 + r)^{n}  1] / r
706,981.6227 = Annuity * [(1 + 0.1)^{10}  1] / 0.1
706,981.6227 = Annuity * 15.93742
Annuity = $44,359.84
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