1-You have $162,000 in your retirement account that is earning 8% per year. How many dollars...
1-You have $162,000 in your retirement account that is earning 8% per year. How many dollars in withdrawals per year would reduce this nest egg to zero in 20 years?
2-Your employer provides a 401(k) plan with a matching contribution of 5% of your salary if you put in at least 5% of your salary. If your monthly salary is $4850, then how much must you contribute to your retirement account each month in order to receive the the matching contribution from your employer?
Homework Answers
1)
Present value of annuity= payment per period * [1-(1+i)^-n]/i
i = interest rate per period
n = number of periods
=>
withdrawal * [1-(1+8%)^-20]/8% = 162000
=>
withdrawals per year = 16500.06
2)
monthly contribution = 4850 * 5%
= 242.5
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