You plan on retiring in 35 years. To support your retirement you want to be able

Question

                    You plan on retiring in 35 years. To support your retirement you want to be able to make 30 annual withdrawls of $100,000 each year with the first withdrawl in                     the day you retire. If you can earn 5.5% on your retirement account for the next 64 years:                 

                    A) How large of a deposit do you have to make today to be able to achieve your retirement goal?                 

                    B) If you decide to save for your retirement by making annual deposits instead of a lump sum today, how much should your annual deposit be, if your first                     deposit was made today and your last deposit is made one year before you retire?                 

                                     This is suppose to be done in excel any advice would help!!!!!!

Explanation / Answer

A') Prsent value of withdrawals = 100,000/1.055^35 + 100,000/1.055^36 + 100,000/1.055^37.........100,000/1.055^64 =

$235,393.20

Value of deposit = $2,35,393.20

B)Let annual deposit = x

Prsent value of deposits = Prsent value of withdrawals

$2,35,393.20 = x + x/1.055 + 1.055^2 ..........1.055^34

x=$14497.31

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