Question
Please show the solution using Microsoft Excel and any relevant formulas Sophie is 30 years old. However, she is already planning for retirement. She plans
Please show the solution using Microsoft Excel and any relevant formulas
Sophie is 30 years old. However, she is already planning for retirement. She plans on retiring in 35 years when she will be 65 years old. Sophie believes she will live until she is 95. She would like to establish a scholarship at Ryerson. The first payment from the scholarship would be $50,000. Thereafter scholarship payments will be made every year. The first scholarship payment would be made 5 years after she retires. In order to keep pace with inflation, Sophie would like the amount of scholarship payments to increase by 2% each year. She wants the payments to continue after her death, which will last forever. During retirement, Sophie expects to earn 5% per year compounded semi-annually.
How much money does she need when she retires at the age of 65?
I know that the formula for the present value of a perpetuity is PMT/i which is 50,000/i in this case but how would I solve for the interest rate and how do I account for the 5 years passed after her retirement?
Another Chegg expert got $1339994.40 as the answer however I don't understand their calculations and I don't know if this is right.
Please explain in detail, thank you!
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