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Helpful Hint: Begin by making a number line to help structure the problem. Count the dates you will deposit/withdraw from the account. This will help

Helpful Hint: Begin by making a number line to help structure the problem. Count the dates you will deposit/withdraw from the account. This will help ensure you have the number of payments correct.

Using your present age,( MY PRESENT AGE IS 20) calculate the annual deposit you must make to an account so that you will have accumulated $2 million at retirement.

Amount of annual deposit=___________

    1. Calculated Using: n=_____, PV=________, I=____, FV=__________
    2. Assume that you will retire on your seventieth birthday.
    3. Assume that you make your first deposit on your next birthday ( October 15th, 2020. I will be 21 years old) and the last deposit on your 69th birthday.
    4. Use the last digit in your student number to determine the interest rate. (MY NUMBER IS 4). For example, if the last digit is 6, assume you can earn 6% on your savings, compounded annually; if the last digit is a 1, assume you can earn 1% on your savings; if the last digit is a 0, assume you can earn 10% on your savings.
    5. Use the last digit in your student number to determine the interest rate. (MY NUMBER IS 4). For example, if the last digit is 6, assume you can earn 6% on your savings, compounded annually; if the last digit is a 1, assume you can earn 1% on your savings; if the last digit is a 0, assume you can earn 10% on your savings.
  1. Calculate the amount that you can withdraw from your retirement savings each year so that is nothing left when you die. Amount of annual withdrawal=___________ Calculated Using: n=_____, PV=________, I=____, FV=__________
    1. Assume that your life expectancy is 95 years.
    2. To simplify the problem, assume that each withdrawal is the same amount each year and that the first withdrawal is on your 70th birthday and your last withdrawal is on your 94th birthday. Use the same interest rate as Part 1.

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