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Required Annuity Payments Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years
Required Annuity Payments
Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, untif age 85 . He wants his first retirement payment to have the same purchasing power at the time he retires as $45,000 has today. He wants all of his subsequent retirement porments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes that if inflation occurs the real value of his retirement income will declne year by vear after he retires). His retirement income will begin the dry he retires, 10 years from today, and he wit then receive 24 additional annual payments. Inflation is expected to be 6% per year from today forward, He currently has $75.000 saved and oxpects to earn a return on his savings of 83 per year with annual compounding-to the hearest doller, hore much must he sarve during each of the neit 10 years (with equal deposits being made at the end of ebch yeac, beginning a year from today) to meet his retirement goar? (Note: Neicher the amount he kaves nor the amount be whadraws upon retirement is a growing annulty.) Oo not round intermediate calculations: Aound vour answer to the nearest dolls Step by Step Solution
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