Your best friend Steve just celebrated his 30th birthday andwants to start saving for his anticipated retirement. Steve plansto retire in 30 years and believes that he will have 25 good yearsof retirement (he has looked at the life expectancy tables and isplaying the odds here) and believes that if he can withdraw$120,000 at the end of each year, he can enjoy his retirement. Inthis problem, assume that the full 25 years of retirement paymentsare made, and the account has a zero balance at the end. Assumethat a reasonable rate of interest for Steve for all scenariospresented below is 7% per year. This is an annual rate, review eachindividual question for more specifics on compounding periods peryear. Because Steve is planning ahead, the first withdrawal willnot take place until one year after he retires. he wants to makeequal annual deposits into his account for his retirement fund.

A. If he starts making these deposits in one year and makes hislast deposit on the day he retires, what amount must he depositannually to be able to make the desired withdrawals atretirement?

A1) First: Amount Steve needs to have saved as of hisretirement:

A2) The amount Steve must save each year (beginning at the endof the first year) to fund his retirement is:

A3) If Steve decides to make monthly deposits for 35 years toreach his same retirement goal, how much must Steve startdepositing one month from today?