Question

(10 points) Denzel wishes to save money to provide for his retirement. He will deposit a fixed amount into a retirement savings account each month that will earn a 9% APR. He will make monthly deposit for 30 years. Then Denzel wishes to withdraw from this account $6,000 monthly forever. During his retirement years, Denzel wants to keep his money in safer investments, so the fund will only earn a 4% APR. How much should the monthly deposits be for Denzel's retirement plan?

Answer 1

| X for monthly withdrawl required C D monthly withdrawl required monthly interest rate earned during the retirement years balance required in the fund the the start of retirement $6,000 0.33% $ 1,800,000 balance required in the fund the the start of retirement monthly interest rate earned by the savings account months for which deposit shall be made monthly deposit required $ 1,800,000 0.75% 360 $983.21 hence, monthly deposits for Denzel's retirement plan should be $ 983.21

for formulas and calculations, refer to the image below -

- X fx monthly withdrawl required А B monthly withdrawl required monthly interest rate earned during the retirement years balance required in the fund the the start of retirement 16000 -4%/12 =C2/C3 =C4 balance required in the fund the the start of retirement monthly interest rate earned by the savings account months for which deposit shall be made monthly deposit required =9%/12 =30*12 =-PMT(C7,C8,0,C6) hence, monthly deposits for Denzel's retirement plan should be =C9

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