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Mike is currently 35 years old and plans on retiring at the age of 65. Ideally,...

Mike is currently 35 years old and plans on retiring at the age of 65. Ideally, Mike would like to retire with $1,000,000.00.

(Input all answers as positive values, no commas, with no symbols ex. no $ or %. Input all % answers as whole numbers without symbols ex. 10.03 for .1003. Input all final answers two decimal places out.)

How much would Mike have to deposit on an annual basis to reach his goal if he can get a return of 12% compounded annually

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Expert Solution

Given that,

Mike is current 35 years old and he will retire at 65.

Amount needed at the time of retirement FV = $1000000

he will make annual deposit of PMT for next t = 30 years at interest rate r = 12%

So, annual deposits can be calculated using FV formula of annuity:

PMT = FV*r/((1+r)^t - 1) = 1000000*0.12/(1.12^30 - 1) = $4143.66

So, he will need to deposit $4143.66 annually to reach his goal.

jeff jeffy answered 2 years ago
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