You are 25 years, compute how much you must save annually to reach your financial goals. Here are your assumptions:
• You hope to have a child in the next three years. For your calculations, you assume that at time = 21 (age = 46), you will need to make the first college payment. You will pay for four years, currently, the tuition is $20,000, and you expect it to increase with inflation at 3% per year.
• You want to change your car in 3 years (time =3, age = 28), and you must have $10,000 for the downpayment.
• You want to buy a house in 10 years and have $100,000 for the downpayment.
• You also want to save money for your retirement. You want your retirement payments to be $100,000 annually, starting when you are 66 years old (time = 41). You expect to live 25 years after you retire, so you must receive 25 payments.
You have $5,000 already saved.