You are currently 40 years old and intend to retire at age 60. To make your...

You are currently 40 years old and intend to retire at age 60. To make your retirement easier, you intend to start a retirement account. At the END of each of years, you will deposit some money to your retirement account till your retire. You expect the account will earn 7% per year. After retirement at age 60, you want to withdraw $10,000 from your retirement account at the END of each year for 10 years. How much money should you plan to deposit in your retirement each year? Requirement: Use all the three methods (1) Solver, (2) Goal Seek, and (3) PV and PMT function to solve for annual deposit. Use snipping tool to screenshot the dialog windows of Solver and Goal Seek with the appropriate parameters.

Expert Solution

Answer)

Inputting the values from the table below , we need to find the PV of the money required at age 60.

Using PV function in excel and using the following values:

PMT = 10,000 , N = 10 , FV = 0, I/Y = 7%

PV = 70,236

Now finding the annula deposits (PMT) from PV of 70,236 at age 40 , We use the PMT function in excel and input the following values:

PV = 0 , FV = 70,236, I/Y = 7%, N = 20

jeff jeffy answered 2 years ago

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