Question

Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $50,000 has today. He wants all his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes that if inflation occurs the real value of his retirement income will decline year by year after he retires). His retirement income will begin the day he retires, 10 years from today, and he will then receive 24 additional annual payments. Inflation is expected to be 5% per year from today forward. He currently has $50,000 saved and expects to earn a return on his savings of 8% per year with annual compounding. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet How much must he save during each of the next 10 years (with equal deposits being made at the end of each year, beginning a year from today) to meet his retirement goal? (Note: Neither the amount he saves nor the amount he withdraws upon retirement is a growing annuity.) Do not round intermediate calculations. Round your answer to the nearest dollar.

Father's current age	50
Number of years until retirement	10
Number of years living in retirement	25
1st retirement payment, same purchasing power today as	$60,000
Inflation rate	6.00%
Current savings at t = 0	$75,000
Percentage return earned	4.00%
Step 1. Calculate retirement payments, beginning at t = 10		Formulas
Fixed retirement payments		#N/A
Step 2. Calculate the value of current savings at t = 10
Value of current savings, 10 years from today		#N/A
Step 3. Calculate the value of the annuity due of retirement payments at t = 10
Value of annuity due		#N/A
Step 4. Calculate the net amount that must be accumulated at t = 10 to receive desired retirement payments
Net amount needed in 10 years		#N/A
Step 5. Calculate the value of annual deposit needed to meet desired retirement goal
Value of annual deposit to meet retirement goal		#N/A

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

I HAVE SOLVED THE SUM WHICH IS WRITTEN IN "WORDS". CELL REFERENCES ARE PROVIDED FOR EASY UNDERSTANDING

BUT THE FIGURES IN EXCEL SHEET ARE DIFFERENT. SO IF YOU WANT ME TO DO WITH EXCEL SHEET FIGURES, LET ME KNOW

PV, FV, ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) Review View Add-Ins - 2x = = Dr General File Home Insert Page Layout Formulas Data % Cut Calibri 11AA = Ea Copy Paste Format Painter BI U D- DA Clipboard Font ci A Wrap Text Merge & Center - $ % , :.: Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles Σ AutoSum : A Fill 2 m Sort & Find & 2 Clear Filter Select Editing Alignment Number Cells D E G H 50 van WNA FATHER'S CURRENT AGE NO OF YEARS UNTIL RETIREMENT NO OF YEARS LIVING IN RETIREMENT 10 25 50000 5% 50000 8% 81444.73 (=C6*(1+C7)^C3] 1ST RETIREMENT PAYMENT INFLATION RATE CURRENT SAVINGS AT t=0 % RETURN EARNED 10 11 STEP 1 CALCULATE RETIREMENT PAYMENTS, BEGINNING AT t=10 12 FIXED RETIREMENT PAYMENTS 13 14 STEP 2 CALCULATE THE VALUE OF CURRENT SAVINGS AT t=10 15 VALUE OF CURRENT SAVINGS, 10 YEARS FROM TODAY 16 17 STEP 3 CALCULATE THE VALUE OF ANNUITY DUE OF RETIREMENT PAYMENT AT t=10 18 VALUE OF ANNUITY DUE 19 20 STEP 4 CALCULATE THE NET AMOUNT THAT MUST BE ACCUMULATED AT t=10 21 NET AMOUNT NEEDED IN 10 YEARS M Sheet3 STATEMENTS Sheet6 Sheet7 Sheets Sheet9 Sheet4 Sheet1 Sheets Sheet10 Rea ferences 107946.25 [=FV(C9,C3,,-C8)] 938956.62 (=PV(C9,C4,-C12,,1)] 831010.37 [=C18-C15] Sheet13 Sheet14 Sheet15 H Sheet11 Sheet12 Sheet16 Sheet17 I BOU 120% I -_ -_ + 1a e 9 W x 2 C .E * * O ENG 10-10-2019

PV, FV, ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) Review View Add-Ins File Home Insert Page Layout Formulas Data - 2x % Cut Calibri 11AA = = = Dr Wrap Text General B I U D- A E S E E Merge & Center - $ % & ... E Copy Paste Format Painter Clipboard C29 Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles Σ AutoSum : A Fill 2 m Sort & Find & 2 Clear Filter Select Editing Font Alignment Number Cells D E F G H - Α. 10 11 STEP 1 CALCULATE RETIREMENT PAYMENTS, BEGINNING AT t=10 FIXED RETIREMENT PAYMENTS 12 81444.73 [=C6*(1+C7)^C3] CALCULATE THE VALUE OF CURRENT SAVINGS AT t=10 VALUE OF CURRENT SAVINGS, 10 YEARS FROM TODAY 107946.25 (=FV(C9,C3,,-C8)] 13 14 STEP 2 15 16 17 STEP 3 18 19 20 STEP 4 21 CALCULATE THE VALUE OF ANNUITY DUE OF RETIREMENT PAYMENT AT t=10 VALUE OF ANNUITY DUE 938956.62 (=PV(C9,C4,-C12,,1)] CALCULATE THE NET AMOUNT THAT MUST BE ACCUMULATED AT t=10 NET AMOUNT NEEDED IN 10 YEARS 831010.37 [=C18-C15] 22 57364 [=PMT(C9,C3,,-C21)] 23 STEP 5 CALCULATE THE VALUE OF ANNUAL DEPOSIT NEEDED TO MEET DESIRED RETIREMENT GOAL 24 25 26 27 28 29 30 M Sheet3 STATEMENTS Sheet6 Sheet7 Sheets Sheet9 Sheet4 Sheet1 Sheets Sheet10 Sheet11 Sheet12 Rea ferences H Sheet13 Sheet14 Sheet15 Sheet16 Sheet17 I BOU 120% I - H a é o . W x 2 REAL DOW9 ..* 4 ENG 04:31