Timmy wants to start his retirement 15 years from now (at t=15 ). He would like to withdraw a sum of $60,000 at the start of every retirement year, for 25 years. To save enough funds for his retirement, Timmy plans to deposit a fixed sum of money into his bank account at the end of each year for the next 15 years. On the day of his retirement, he will deposit the last amount into his bank account, and will also make his first withdrawal of $60,000 for his annual retirement needs. Timmy's bank account earns annual interest of 5%, with interest being compounded monthly. (a) What is the amount Timmy should have in his bank account 15 years from now in order for him to meet his planned retirement needs? (5 marks) (b) What amount should Timmy deposit into his bank account for the next 15 years? (7 marks) Note: Question No. 3 continues on page 6 5 BU8201 Question 3 (continued) (c) If Timmy decides to make deposits at the end of every month (instead of annual deposits) into his bank account, but wants to make the deposits only for the first 10 months of each year, with no deposits for the last 2 months of each year, what should the monthly amount be? (10 marks) Timmy wants to start his retirement 15 years from now (at t=15 ). He would like to withdraw a sum of $60,000 at the start of every retirement year, for 25 years. To save enough funds for his retirement, Timmy plans to deposit a fixed sum of money into his bank account at the end of each year for the next 15 years. On the day of his retirement, he will deposit the last amount into his bank account, and will also make his first withdrawal of $60,000 for his annual retirement needs. Timmy's bank account earns annual interest of 5%, with interest being compounded monthly. (a) What is the amount Timmy should have in his bank account 15 years from now in order for him to meet his planned retirement needs? (5 marks) (b) What amount should Timmy deposit into his bank account for the next 15 years? (7 marks) Note: Question No. 3 continues on page 6 5 BU8201 Question 3 (continued) (c) If Timmy decides to make deposits at the end of every month (instead of annual deposits) into his bank account, but wants to make the deposits only for the first 10 months of each year, with no deposits for the last 2 months of each year, what should the monthly amount be? (10 marks)