DISCUSS QUESTION #3

James Reed, a recent graduate of a nationally recognized business program wants to be able to travel around the world. James does not have enough money at this time, but believes he can save up enough money to travel around the world in ten years ($100,000). His father, Warren Reed just turned 45. He has decided that he would like to retire when he is 70. He thinks that he will need $2,000,000 in special retirement accounts at age 70 to maintain his current lifestyle. For the next 10 years he can afford to put $10,000 per year into the account. At age 55 he will need to withdraw $30,000 to travel part of the world with his son.

ROUND ALL NUMBERS TO THE NEAREST WHOLE DOLLAR

PRIMARY POST: Question 3

1) If James currently has $5,000 to invest and estimates he can earn 5% compounded annually on his investment, calculate how much must James put aside at the end of each of the next ten years in order to accumulate the $100,000 he anticipates will be needed to fulfill his dream? Include a description of the steps involved in your post.

2) If Warrens retirement account earns 8% compounded annually, how much will Warren need to deposit each year for the last 15 years of his work career to attain the $2,000,000 goal? Include a description of the steps involved in your post.