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Engineering Economics 3. Suzanne is 30 years old and would like to maximize the amount of money she can deposit into her retirement account, however
Engineering Economics 3. Suzanne is 30 years old and would like to maximize the amount of money she can deposit into her retirement account, however she is limited in the amount she can deposit. The IRS limits the maximum deposit amount and she has leftover student debt that also limits her deposit rate, The IRS limit is $18,500 today and is expected to rise by the cost of inflation at 2.5% per year. Because of her student debt Suzanne can only deposit $6,000 per year for the first six years. On year seven she will be able to deposit the maximum allowable amount by the IRS into her account and is expecting to do so for 20 consecutive years. The expected rate of return on this account is 8% per year compounded annually. od ist -est ple am peric What is the maximum deposit she will be allowed by the IRS in year seven? sas rest a. How much money will have accumulated in her account after 26 years? b. Since she can only begin withdrawing from her retirement account after age 59 and since she expects to live to the average life expectance of 88 years, what is the equivalent uniform annual amount she can withdraw from this account if she expects to withdraw this account completely over her remaining life expectancy? Consider that the account continues to return 8% per year compounded annually. CASH FLOW DIAGRAM
Engineering Economics
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