Suppose you are 40 years old and plan to retire in exactly 20 years. Twenty-one years from now you will need to withdraw $5,000 per year from a retirement fund to supplement your social security payments. You expect to live to the age of 85. How much money should you place in the retirement fund each year for the next 20 years to reach your retirement goal if you can earn 12 percent interest per year from the fund?

Suppose you are 40 years old and plan to retire in exactly 20 years. Twenty-one years from now you will need to withdraw $5,000 per year from a retirement fund to supplement your social security payments. You expect to live to the age of 85. How much money should you place in the retirement fund each year for the next 20 years to reach your retirement goal if you can earn 12 percent interest per year from the fund? Step 1: Formula reference 12% 20 45 21 61 0 20 n= age 40 41 42 43 60 85 Step 2: Formula reference 12% 25 n= 5000 PV/FV api Step 1 PMT stutbene Step 2 This is how much you should place in your retirement fund each year PMT should be negative