6. Ruber (Forever) Perpetual Annuity - infinite life You would like to set up a perpetual annuity for your retirement. Assuming interest rates remain at 7% and you want to be able to withdraw $90,000 annually, how much money will you need? Annuity Interest rate 90.000 =retirement savings x.07 = $90,000 = $1,235,714 07 Perpetual Annuity with the effects of inflation: -each year your retirement withdrawal will increase due to planned inflation Annuity Interest rate inflation rate retirement savings (Same example as above with 3% inflation) 90000 = $2,250,000 .07.03 90000 90000 (1.03)=90,700 Amortization Schedule for a 5 year, $30,000 loan with 9% interest Year Principal Loan Balance Payment Interest 0 1 2 3 4 5