Question
Your second cousin has just turned 30 years old, has just received her master's degree in neurofinance and has accepted her first job. Now she
Your second cousin has just turned 30 years old, has just received her master's degree in neurofinance and has accepted her first job. Now she must decide how much money to put into her retirement plan. The plan works as follows: Every dollar in the plan is expected to earn 8% p.a. She cannot make withdrawals until she retires on her 65thbirthday. After that point, she can make withdrawals as she sees fit. She plans on living to 100 years and working until she turns 65. She estimates that to live comfortably in retirement, she will need $120,000 every year starting at the end of the first year of retirement and ending on her 100thbirthday. Assume that she starts the contribution to her retirement plan on her 31stbirthday and that she will contribute the same amount to the plan at the end of every year that she works. (Hint:Use a timeline to help you picture the cash flows.) The amount of money she would need to contribute each year to fund her retirement isclosestto:
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