Question

In: Finance

Suppose you are 40 years old and plan to retire in exactly 20 years. Twenty-one years from now you will need to withdraw RM5,000 EVERY SIX MONTHS from a retirement fund to supplement your social daily life expenses.

Suppose you are 40 years old and plan to retire in exactly 20 years. Twenty-one years from now you will need to withdraw RM5,000 EVERY SIX MONTHS from a retirement fund to supplement your social daily life expenses. You expect to live to the age of 85. How much money should you place in the retirement fund every six months for the next 20 years to reach your retirement goal if you can earn 12 percent interest per year from the fund?

Solutions

Expert Solution

Here,

Amount to be withdrawn semi-annually = RM5,000

Time Period = 25 years

Interest rate = 12%

First of all, find out the present value of this withdrawn amount

 

Using the PV Function of Excel

 

Calculations are made as follows:

 

Now, this amount at retirement becomes the future value,

Using the PMT Function of Excel

 

Calculations are made as follows:

The Amount to be placed into retirement every six months is RM509.23.

The Amount to be placed into retirement every six months is RM509.23.

Nabeel answered 1 year ago
Next > < Previous

Related Solutions

You plan to retire in exactly 20 years. Your goal is to create a fund that...
You plan to retire in exactly 20 years. Your goal is to create a fund that will allow you to receive $20,000 at the end of each year for the next 30 years between retirement and death (a psychic told you that you’d die exactly 30 years after you retire). You know that you will be able to earn 11% per year during the 30-year retirement period. Required: d. Now assume that you will earn 10% from now through the...
You are planning your retirement investment plan. Assume you are now twenty-two years old and plan...
You are planning your retirement investment plan. Assume you are now twenty-two years old and plan to make investments as follows: Invest $6,000 at the end of each year for the first ten years. Invest $12,000 at the end of each year for the second ten years. Invest $18,000 at the end of each year for the third ten years. Invest $24,000 at the end of each year for the fourth ten years. Assume that you invest in a diversified...
To supplement your​ retirement, you estimate that you need to accumulate ​$270,000 exactly 35 years from...
To supplement your​ retirement, you estimate that you need to accumulate ​$270,000 exactly 35 years from today. You plan to make​ equal, end-of-year deposits into an account paying  11% annual interest. a.  How large must the annual deposits be to create the ​$270,000 fund by the end of 3535 ​years? b.  If you can afford to deposit only ​$660 per year into the​ account, how much will you have accumulated in 35 ​years?
You will retire 20 years from now, and you think you will need an income of...
You will retire 20 years from now, and you think you will need an income of $6,000 per month for 20 years after you retire. You will begin saving for retirement by saving $700 per month for the next 10 years. How much will you have to save each month in the 10 years after that to have enough to meet your retirement goal? The interest rate is 9% APR. Round your answer to the nearest dollar.
You will retire 20 years from now, and you think you will need an income of...
You will retire 20 years from now, and you think you will need an income of $6,000 per month for 20 years after you retire. You will begin saving for retirement by saving $700 per month for the next 10 years. How much will you have to save each month in the 10 years after that to have enough to meet your retirement goal? The interest rate is 9% APR. Round your answer to the nearest dollar.
You are doing some long-range retirement planning. On the day you retire (23 years from now) you want to be able to withdraw $200,000
You are doing some long-range retirement planning. On the day you retire (23 years from now) you want to be able to withdraw $200,000. Then, you want to withdraw the following amounts at the end of each year after that (during your retirement period).                           Years 1-4            $160,000                           Years 5-9            $175,000                           Years 10-15       $165,000                           Years 16-26       $145,000At the end of the 26th year in retirement, you’d like to have $500,000 remaining in your retirement account available for withdraw. During your retirement...
You are 30 years old today and planning to retire at age 62. You want to plan your finances for living 35 years past age 62 and die dead broke. You determine you will need $3000 per month from age 62 for the 35 years.
You are 30 years old today and planning to retire at age 62. You want to plan your finances for living 35 years past age 62 and die dead broke. You determine you will need $3000 per month from age 62 for the 35 years.Your plan is to go live in the tropics, on the beach, and live on coconuts and fishing. Also, you need to conclude your retirement savings at age 55 because all your spare money then will...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT