Question
After celebrating your 20th birthday today. You have decided that it is time to think of the future and to start saving for your anticipated
After celebrating your 20th birthday today. You have decided that it is time to think of the future and to start saving for your anticipated retirement at age 70. You want to be able to withdraw $19,000 from your savings account on each birthday for 17 years following retirement; the first withdrawal will be on your 71st birthday. You intend to invest the money in a safe investment account which offers 7% interest per year. You have a desire to make equal, annual payments on each birthday into the account.
If you start these deposits on your 21st birthday and continues to make deposits until you are 70 (the last deposit will be on your 70th birthday), what amount must you deposit annually to be able to make the desired withdrawals at retirement?
Suppose you has an inheritance come through and it was a large sum of money. Rather than make equal annual payments, you decide to make one lump-sum deposit on your 21st birthday to cover your retirement needs. What amount would she have to deposit?
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