Question

In: Finance

You want to be able to withdraw $20,000 from your account each year for 15 years...

You want to be able to withdraw $20,000 from your account each year for 15 years after you retire. You expect to retire in 30 years. If your account earns 9% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?

$ __________________________
Round your answer to the nearest cent.

Expert Solution

Periodic withdrawal each year after retirement for 15 years = $20,000

Calculating the Present value of these withdrawals:-

Where, C= Periodic Withdrawals = $20,000

r = Periodic Interest rate = 9%

n= no of periods = 15

Present Value = $161,213.77

So, Amount to accumulate to reach retirement goals is $161,213.77

Now, Calculating the Periodic deposits that needs to be saved to accumulate above amount:-

Where, C= Periodic Depsoits

r = Periodic Interest rate = 9%

n= no of periods = 30

Future Value = $161,213.77

C= $1182.72

So, the need to deposit each year until retirement to achieve your retirement goals is $1182.72

If you need any clarification, you can ask in comments.

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jeff jeffy answered 2 years ago

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