Question

Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 72.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 72.0 when he fully retires, he will wants to have $2,975,569.00 in his retirement account. He he will make contributions to his retirement account from his 26th birthday to his 65th birthday. To reach his goal, what must the contributions be? Assume a 6.00% interest rate.

Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 75.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 75.0 when he fully retires, he will wants to have $3,119,504.00 in his retirement account. He he will make contributions to his retirement account from his 26th birthday to his 65th birthday. To reach his goal, what must the contributions be? Assume a 9.00% interest rate.

Answer format: Currency: Round to: 2 decimal places.

Answer 1

Q1:

Amount of contributions

$13,642.25

Workings

Amount required at age 72	2975569
PV of the amount at age 65	$1,978,923.33
Amount of contributions	$13,642.25

Q2:

Amount of contributions

$9,084.01

Workings

Amount required at age 75	3119504
PV of the amount at age 65	$1,317,712.20
Amount of contributions	$9,084.01

Formulae used