Your second cousin has just turned 30 years old, has just received her master’s degree in...

Your second cousin has just turned 30 years old, has just received her master’s degree in

neurofinance and has accepted her first job. Now she must decide how much money to put into

her retirement plan. The plan works as follows: Every dollar in the plan is expected to earn 8%

per annum. She cannot make withdrawals until she retires on her sixty-fifth birthday. After that

point, she can make withdrawals as she sees fit. She plans on living to 100 years and working

until she turns 65. She estimates that to live comfortably in retirement, she will need $120,000

every year starting at the end of the first year of retirement and ending on her 100th birthday.

Assume that she will contribute the same amount to the plan at the end of every year that she

works. The amount of money she would need to contribute each year to fund her retirement is

closest to:

a) $7,475.

b) $8,116.

c) $8,207.

d) $8,817.

Solutions

Expert Solution

Correct Answer = b) $8116

REFER BELOW DETAIL WORKING. PLEASE THUMBS UP :)

jeff jeffy answered 1 year ago

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