I plan to retire in 40 years and live 30 years after retiring.•After retirement I...

I plan to retire in 40 years and live 30 years after retiring. •After retirement I want to be able to withdraw $30,000 each year. •The annual interest rate is 8%.•How much do I need to save each year in the next 40 years? How would you do this on a BAII Plus Calculator?

Expert Solution

This is two step problem
Step - 1 Present value of withdrawal

we have to use financial calculator to solve this
Put in calculator

FV		0
PMT		-30000
I		8%
N		30

Compute PV		$337,733.50


Step 2 - Computation of annual contribution
Put in calculator

FV		$337,733.50
PV		0
I		8%
N		40

compute PMT		($1,303.71)

Ans =		$1,303.71

jeff jeffy answered 3 years ago

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