You are trying to decide how much to save for retirement. Assume you plan to save...

90.2K

Verified Solution

Question

Finance

You are trying to decide how much to save for retirement. Assumeyou plan to save $8,000 per year with the first investment made oneyear from now. You think you can earn 8.5​% per year on yourinvestments and you plan to retire in 39 ​years, immediately aftermaking your last $8,000 investment. a. How much will you have inyour retirement account on the day you​ retire? b.​ If, instead ofinvesting $8,000 per​ year, you wanted to make one​ lump-suminvestment today for your retirement that will result in the sameretirement​ saving, how much would that lump sum need to​ be? c. Ifyou hope to live for 24 years in​ retirement, how much can youwithdraw every year in retirement​ (starting one year after​retirement) so that you will just exhaust your savings with the24th withdrawal​ (assume your savings will continue to earn 8.5​%in​ retirement)? d.​ If, instead, you decide to withdraw $435,000per year in retirement​ (again with the first withdrawal one yearafter​ retiring), how many years will it take until you exhaustyour​ savings? (Use​ trial-and-error, a financial​ calculator:solve for​ \"N\", or​ Excel: function​ NPER) e. Assuming the most youcan afford to save is $1,600 per​ year, but you want to retire with$1,000,000 in your investment​ account, how high of a return do youneed to earn on your​ investments? (Use​ trial-and-error, afinancial​ calculator: solve for the interest​ rate, or​ Excel:function​ RATE)

Answer & Explanation Solved by verified expert
4.1 Ratings (844 Votes)
a We are given the following informationPMT800000r850n39T1We need to solve the following equation to arrive at therequired FVSo at the time of the retirement the fund will have217277446b We are    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students