A person deposits $3,000 annually in a retirement account that earns 8 percent.

Question

A person deposits $3,000 annually in a retirement account that earns 8 percent. 1. HOW much will be in the account when the person retires at age 65 if the savings stat when the person is 40 ? 2. How much additional money will be in the accountant if the saver defers retirement until 70 and continues to make contributions? 3. How much additional money will be in the account if the saver stops contributions at 65 but does not retire till age 70? A 45 year old man puts funds into a retirement plan. He can save $2,000 a year and earn 9 percent on the savings. How much will accumulate if he retires at age 65? at retirement how much can he withdraw each year for 20 years from the accumulated savings if the savings continue at 9 percent? Some guys parents want to have $100,000 to send a newborn child to college, how much must be invested annually for 18 years if the funds earn 9 percent? please show all computations Finance

Explanation / Answer

A self-employed person deposits $3,000 annually in a retirement account (called a Keogh account) that earns 8 percent. a. How much will be in the account when the individual retires at the age of 65 if the savings program starts when the person is age 40? PV of Annuity = $3,000 x [1-(1.08)-25] / 0.08 PV of Annuity = $32,024.33 FV = $32,024.33 x (1.08)25 FV = $219,317.83 =========================== How much additional money will be in the account if the saver defers retirement until age 70 and continues the contributions? PV of Annuity = $3,000 x [1-(1.08)-30] / 0.08 PV of Annuity = $33,773.35 FV = $33,773.35 x (1.08)30 FV = $339,849.63 Additional Money = $339,849.63

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.