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Assume you are now 2 1 years old and will start working as soon as you graduate from college. You plan to start saving for

Assume you are now 21 years old and will start working as soon as you graduate from college. You plan to start saving for your retirement on your 25 th birthday and retire on your 65 th birthday. After retirement, you expect to live at least until you are 85. You wish to be able to withdraw $48,000(in today's dollars) every year from the time of your retirement until you are 85 years old (i.e., for 20 years). The average inflation rate is likely to be 5 percent.
Problem 6.42(a)
Your answer is correct.
Calculate the lump sum you need to have accumulated at age 65 to be able to draw the desired income. Assume that the annual return on your investments is likely to be 10 percent. (Round arswer to 2 decimal ploces, eg.15.25. Round intermediate value to 3 decimal places, eg.359400.312 Do not nound factor volues)
Lump sum amount accumulated at age 65
$
eTextbook and Media
Attempts: unlimited
Problem 6.42(b)
Your answer is correct.
What is the dollar amount you need to invest every year, starting at age 26 and ending at age 65(i.e, for 40 years), to reach the target lump sum at age 65?(Round factor values to 4 decimal places, es.1.5212 and final answer to 2 decimal places, es.1.525.12)
Investment needed to reach the target
$
eTextbook and Media
Attempts: unlimited
Problem 6.42(c)
Your answer is incorrect.
Now answer parts a. and b. assuming the rate of return to be (i)8 percent per year, and (ii)15 percent per year. (Round answers to 0 decimal places, eg.1,525)
\table[[,,8 percent,,15 percent],[Lump sum needed at age 65,$,,$,],[Annuity payment needed,$,,$,]]
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