Wants to be able to withdraw $80,000 per year at the end of each year from...

Wants to be able to withdraw $80,000 per year at the end of each year from his retirement account for 30 years after he retires. Assuming a 7% annual compound interest rate, what is the minimum amount Mr. Smith must-have in this account when he retires?

Please indicate what you entered into your calculator to solve these problems.

Expert Solution

Present value of annuity = Annuity amount * PVAF (rate of interest, number of years )

= 80,000 * PVAF(7%, 30)

= 80,000 * [ 1/1.07 + 1/1.07² + ....... + 1/1.07³⁰ ]

= 80,000 * 12.4090

= $ 992,723.30 Answer

jeff jeffy answered 1 year ago

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