You would like to have an annual $120,000 income generated from your retirement
ID: 2720469 • Letter: Y
Question
You would like to have an annual $120,000 income generated from your retirement fund one year after your 65-year old birthday for 30 years. You are exactly 25 years old now and you decided to start a retirement fund investment to reach that goal one year from now and make your last deposit on your 65-year old birthday. Assume the annual interest rate stays at 8% per year and all investment and withdrawal of funds are made at the end of each year. How much money will you accumulate in this retirement account right after your last deposit? Everything is the same from the Question above, how much do you have to invest each year to reach that amount above?Explanation / Answer
Fund Value at the time of retirement= 120000*PVIFA(0.08,30)=120000*11.258=1350960
Investment per year =1350960 /FVIFA(0.08,40)=1350960/259.057=5214.91
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