a. If she starts making these deposits on her 28th birthday and continues to make deposits until she is 65 (the last deposit will be on her 65th birthday), she must deposit $______ annually to be able to make the desired withdrawals at retirement.
I figured this one out. It came out to be $893.48.
b. Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, she has decided to make one lump sum payment on her 27th birthday to cover her retirement needs. This deposit will have to be in the amount of $_____ .
This is $7345.26
c. Suppose your friend's employer will contribute $300 to the account every year as part of the company's profit-sharing plan. In addition, your friend expects a $30,000 distribution from a family trust fund on her 55th birthday, which she will also put into the retirement account. She must deposit $ annually now to be able to make the desired withdrawals at retirement.
I cant figure this one out!!!!|||Since you've done parts (a) and (b) correctly, it seems like you know all the formulas. You just need some help on how to structure part (c). You have to do it in several steps, some of which you've already done.
Step 1: How much money you'll need at retirement. $544,869.16 (this, you've already calculated from part (a))
Step 2: Future value of 30,000. 10 years at 12% interest. $93,175.45
Step 3: Future value of 38 payments of $300 at 12% interest. $182,949.16
Step 4: Subtract steps 2 and 3 from step 1. $268,744.55. This is how much you will have to save on your own.
Step 5: Find the amount of 38 yearly payments at 12% interest that will yield a future value of $268,744.55. ($440.69)|||how did you figure out part a and b??? i have a similiar problem and keep getting stuck.
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