You turned 25 today and you want to retire on your 60th birthday. Starting with the...

 

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You turned 25 today and you want to retire on your 60th birthday. Starting with the day of your retirement, you would like to have a growing annuity ($50,000 payment on the day of your retirement and growing by 3% each year thereafter for a total of 35 years of payments). You will start saving with equal annual deposits of $4,711.22 into an investment account beginning in one year from today and ending after 25 total deposits. Assume a discount rate of 9%. As of the date of your 55th birthday, your plan is underfunded by what amount? Round to the nearest thousand dollars. Hint....it is a 6 digit number ending in 000. Use the $ symbol! You turned 25 today and you want to retire on your 60th birthday. Starting with the day of your retirement, you would like to have a growing annuity ($50,000 payment on the day of your retirement and growing by 3% each year thereafter for a total of 35 years of payments). You will start saving with equal annual deposits of $4,711.22 into an investment account beginning in one year from today and ending after 25 total deposits. Assume a discount rate of 9%. As of the date of your 55th birthday, your plan is underfunded by what amount? Round to the nearest thousand dollars. Hint....it is a 6 digit number ending in 000. Use the $ symbol!

Answer rating: 100% (QA)

To calculate the underfunded amount we need to find the future value of the growing annuity and comp... View the full answer