Question
Assume that you are 50 years old and wish to retire at age 65. You expect to be able to average a 6% annual rate
Assume that you are 50 years old and wish to retire at age 65. You expect to be able to average a 6% annual rate of interest on your savings over your lifetime. You would like to save enough money to provide $8,000 per year beginning at age 66. Suppose you decide that the extra income needs to be provided for 15 years (up to age 80). Assume that your first contribution to the savings plan will take place one year from now. a. How much must you save each year between now and retirement? b. Now assume the government establishes a program requiring you to save $300 each year while working in a government-managed account. Discuss how this affects your answer to a. Below are some present value annuity factors (PVAF) and future value annuity factors that you might find useful. PVAF(6%, 15)=9.71225 PVAF(6%, 25)=12.78336 FVAF(6%, 15)=24.67253 FVAF(6%, 25)=54.86451
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