You have just inherited a large sum of money and you are trying to determine how much you should save for retirement and how much you can spend now. For retirement, you will deposit today (January 1, 2015) a lump sum in a bank account paying 10% compounded annually. You dont plan on touching this deposit until you retire in five years (January 1, 2020), and you plan on living for 20 additional years and then drop dead on December 31, 2039. During your retirement, you would like to receive income of $60,000 per year to be received the first day of each year, with the first payment on January 1, 2020, and the last payment on January 1, 2039. Complicating this objective is your desire to have one final three-year fling, during which time youd like to track down all the original members of The Harry Potter Series and get their autographs. To finance this, you want to receive $300,000 on January 1, 2035, and nothing on January 1, 2036, and January 1, 2037, as you will be on the road. In addition, after you pass on (January 1, 2040), you would like to have a total of $100,000 to leave to your children.

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How much must you deposit in the bank at 10% p.a. compounded annually on January 1, 2015, in order to achieve you goal. Use a time line in order to answer this question.