Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Part I a. You plan to retire in exactly 20 years. Your goal is to create a fund that will allow you to receive $30,000
Part I a. You plan to retire in exactly 20 years. Your goal is to create a fund that will allow you to receive $30,000 at the end of each year for the 30 years between retirement and death (a psychic toid you would die exactly 30 years after you retire). You know that you will be able to carn 13% per year during the 30 -year retirement period. i. How large a fund will you need when you retire in 20 years to provide the 30 -year, $30,000 retirement annuity? 5 marks ii. How much will you need today as a single amount to provide the fund calculated in part (i) if you eam only 10% per year during the 20 years preceding retirement? 4 marks iii. What effeet would an increase in the rate you can cam both during and prior to retirement have on the values found in parts (i) and (ii)? Explain. 2 marks iv. Now assume that you will eam. 11% from now through the end of your retirement. You want to make 20 end-of-year deposits into your retirement account that will fund the 30 -year stream of $30,000 annual annuity payments. How large do your annual deposits have to be? 3 marks
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started