You are planning for an early retirement. You would like to retire at age 40 and have
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To make your plan work, answer the following:
1. How much money must you accumulate by retirement? (Hint: Find the present value of the $225,000 withdrawals.)
2. How does this amount compare to the total amount you will draw out of the investment during retirement? How can these numbers be so different?
3. How much must you pay into the investment each year for the first twenty years?
4. How does the total out-of-pocket savings compare to the investment's value at the end of the twenty-year savings period and the withdrawals you will make during retirement?
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