Question

You plan to retire at age 40 after a highly successful but short career. You would like to accumulate enough money by age 40 to withdraw $225,000 per year for 40 years. You plan to pay into your account 15 equal installments beginning when you are 25 and ending when you are 39. Your account bears interest of 12 percent per year.

Required:
1. How much do you need to accumulate in your account by the time you retire?
2. How much do you need to pay into your account in each of the 15 equal installments?
3. Is this a future-value problem or a present-value problem? Explain.



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  • CreatedApril 22, 2014
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