You are 40 years old and want to retire at age 65. Each year, starting one year from now, you will deposit an equal amount into an investment account that pays 4.6% interest. The last deposit will be on your 65th birthday. On your 65th birthday you will switch the accumulated savings into a safer bank account that pays only 3.1% interest. You will withdraw your annual income of $110,000 at the end of that year (on your 66th birthday) and each subsequent year until your 90th birthday. On that birthday you want to give $350,000 to your children. How much do you have to save each year to make this retirement plan happen?
You are 40 years old and want to retire at age 65. Each year, starting one year from now, you will deposit an equal amount into an investment account that pays 4.6% interest. The last deposit will be on your 65th birthday. On your 65th birthday you will switch the accumulated savings into a safer bank account that pays only 3.1% interest. You will withdraw your annual income of $110,000 at the end of that year (on your 66th birthday) and each subsequent year until your 90th birthday. On that birthday you want to give $350,000 to your children. How much do you have to save each year to make this retirement plan happen?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...
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