You would like to have $5 million dollars when you retire at age 65. You are 25 years old and you want to make your first savings payment immediately.

You would like to have $5 million dollars when you retire at age 65. You are 25 years old and you want to make your first savings payment immediately. You have not saved any money for your retirement as of yet. Assume interest rate is 7%, how much money must you set aside per year until and including your 65th birthday? How do I do this in excel?

Expert Solution

When first savings would be made immediately than the current would be counted as the investment year.

Therefore total years of investments = 41 years

Annual Annuity required to achieve the retirement corpse = P*r/((1+r)^t - 1)

= 5,000,000*0.07/(10.7^41 -1)

= $23,298.12228

in excel just input this: "=PMT(7%,41,,5000000)"

jeff jeffy answered 2 years ago

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You would like to have $5 million dollars when you retire at age 65. You are 25 years old and you want to make your first savings payment immediately.

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