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Gabriel is planning her retirement. One year from today, she will begin depositing the same...

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Finance

Gabriel is planning her retirement. One year from today, she will begin depositing the same fixed amount each year for the next 35 years into a retirement savings account. Starting one year after making her final deposit, she will withdraw $120,000 annually for each of the following 30 years (i.e. she will make 30 withdrawals in all). Assume that the retirement fund earns 9% annually over both the period that she is depositing money and the period she makes withdrawals. In order for Gabriel to have sufficient funds in her account to fund her retirement, how much should she deposit annually?

Periods

PV of 1

PV of Ordinary Annuity

PV of Annuity due

30

.07540

10.2737

11.1983

35

.04900

10.5668

11.5178

Periods

FV of 1

FV of Ordinary Annuity

FV of Annuity due

30

13.2676

136.3075

125.1354

35

20.4139

215.7108

197.9823
  • A.

    $6,227

  • B.

    $9,302

  • C.

    $10,133

  • D.

    $5,715

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