Week 7 Written Assignment Show all work. Answers given without the proper mathematical explanation will receive little to no credit.

1. Suppose your current employer offers a retirement plan that provides a benefit of $5,000 a month from age 67 until death. According to your calculations, $5,000 a month will not be sufficient to support the lifestyle you plan on leading. You have determined that you need an additional $2,000 a month to supplement the employee retirement benefit. Assuming you will live until the age of 90, calculate the present value at age 67 of the $2,000 per month supplemental retirement benefit, assuming a conservative rate of return of 3%.

Answer:

2. Relative to your current age, the present value at age 67 found in question #1 becomes the future value you need to obtain given your current age now, How much money do you need to deposit starting today in order to obtain the present value calculated above at age 67? Suppose your currently 25 years old and assume a 4% growth rate.

Answer: