After you retired you plan to spend $200,000 a year for 25 years. The annually compounded interest rate is 10%. How much must you save by the time you retire to support this spending plan.

Present the solution in the following steps.

In the first step I want to see which formula would you use. Write down that general formula without inserting any values. In the second step insert the values and solve the formula. You would need the annuity table to solve this question. In the third step show me which row and column of the annuity table would you use. (e.g you can say row x say row x and column y). What is the value of the annuity factor for this question from the annuity table?

17) T

STEP 1

FORMULA

STEP 2

INSERT VALUES INTO FORMULA

STEP 3

WHAT IS THE ROW AND COLUMN FROM THE ANNUITY TABLE

Step 4

WHAT IS THE ANNUITY FACTOR VALUE

STEP 5

1. WHATS THE NUMERAICAL ANSWER FOR THIS QUESTION. BRIEFLY EXPLAIN YOUR ANSWER