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 begin to make annual withdrawals of $128,600.00 from his retirement account until he turns 88.00. After this final withdrawal, he wants $1.02 million remaining in his 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 8.00% interest rate.

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

Answer 1

Answer:

Calculation of Amount of Contribution:

To calculate the amount of contribution, we need to calculate the amount required at the end of 72 years, accumulated amount at the end of 65 years.

Now calculate the Amount of Contribution,

Hence, the Amount of Contribution is $2,563.84.