CH7 Q 3

You are 40 years old and want to retire at age 55.

Each year, starting one year from now, you will deposit an equal amount into an investment account that pays 4%

interest. The last deposit will be on you 55th

birthday. On your 55th birthday you will switch the accumulated savings into a safer bank account that pays only 2.5% interest. You will withdraw your annual income of $150,000at the end of that year (on your 56th birthday) and each subsequent year until your75tH

birthday. On that birthday you want to give $300,000

to your children. How much do you have to save each year to make this retirement plan happen?

Question content area bottom

Part 1

How much do you have to save per year during your working years in order to achieve your retirement goal?

$enter your response here

(Round to the nearest cent.)