Today is Constances 35th birthday. She would like to start saving for her anticipated retirement at age 65. During her retirement, she would like to withdraw $110,000 from her savings account on each birthday, with the first withdrawal occurring on her 66th birthday. Because of the longevitY of previous generations in her family, Constance expects to live for 25 years after retiring. Constance intends to make equal annual deposits on each birthday, with the last deposit occurring on her 65th birthday. Constances bank pays an interest rate of 5%.

A.What amount must Constance deposit annually to be able to make the desired withdrawals at retirement?

B. Suppose that Constance just inherited a large sum of money. Rather than make annual deposits, Constance would like to make one deposit today that is sufficient to fund her retirement, assuming an interest rate of 5%. How much would Constance need to deposit today?

C. Suppose that Constances employer will contribute $5,000 to the account every year. Also, Constance expects a $50,000 distribution from a family trust when she turns 55; she intends to deposit this amount into her savings account. How much must Constance deposit annually so that she will be able to with draw $110,000 from her account each year during retirement?

*SOLVE USING EXCEL!

Years until retirement Years during retirement Withdrawal during retirement 0.0500 30 25 110,000 Present value of withdrawals at t-30 Future value of deposits at t 30 Required deposit Lump sum alternative Distribution of trust fund at t-20 50,000 Required total annual deposit Less employer's annual contribution Net annual deposit required 5,000