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Derek decides that he needs $132,685.00 per year in retirement to cover his living expenses.

Derek decides that he needs $132,685.00 per year in retirement to cover his living expenses. Therefore, he wants to withdraw $132685.0 on each birthday from his 66th to his 88.00th. How much will he need in his retirement account on his 65th birthday? Assume a interest rate of 7.00%


Solutions

Expert Solution

The amount is computed as follows:

Present value = Annual amount x [ (1 – 1 / (1 + r)n) / r ]

= $ 132,685 x [ (1 - 1 / (1 + 0.07)23 ) / 0.07 ]

= $ 132,685 x 11.27218738

= $ 1,495,650.18 Approximately

jeff jeffy answered 2 years ago
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