Question

Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $40,000 has today. (The real value of his retirement income will decline annually after he retires.) His retirement income will begin the day he retires, 10 years from today, at which time he will receive 24 additional annual payments. Annual inflation is expected to be 3%. He currently has $60,000 saved, and he expects to earn 9% annually on his savings. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet How much must he save during each of the next 10 years (end-of-year deposits) to meet his retirement goal? Do not round your Intermediate calculations. Round your answer to the nearest cent.

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

QVO 1x 2 ENG . W | 07:21 16-03-2020 ... o X F4 : x fix D E F G H A 2 40000 10 25 3 retirement income today years to retirement 5 years of retirement 6 inflation rate 7 savings 8 rate of return 3% 60000 9% 10 calculate value of savings in 10 years 11 savings at t=10 142041.82 (=FV(B8,B4,,-B7)] 12 [=B3*(1+B6)^B4] [=PV(B8,85,-B14)] 13 calculate value of fixed retirement income in 10 years 14 retirement income at t=10 53756.66 15 16 calculate value of 25 begiining of year retirement payments at t=10 17 retirement payments at t=10 575551.64 18 19 calculate net amount needed at t=10 20 value of retirement payments 575551.64 21 value of savings 142041.82 22 net amount needed 433509.82 23 calculate annual savings needed for next 10 years 24 annual savings needed for retirement 28533.66 25 ... NPER APR CPI ear FVA s2 pva s3 STATE s6 s7 s8 s9 s4 MORTGAGE 51 55 s2 s11 s12 (=B17] [=B11] [=B20-B21) OR (=B17-B11] [=PMT(B8,B4,,-B22)] s13 s14 s15 s16 s17F 51 518f : ... Đ : 1

QVO 1x 2 ENG . W | 07:21 16-03-2020 ... o X F4 : x fix D E F G H A 2 40000 10 25 3 retirement income today years to retirement 5 years of retirement 6 inflation rate 7 savings 8 rate of return 3% 60000 9% 10 calculate value of savings in 10 years 11 savings at t=10 142041.82 (=FV(B8,B4,,-B7)] 12 [=B3*(1+B6)^B4] [=PV(B8,85,-B14)] 13 calculate value of fixed retirement income in 10 years 14 retirement income at t=10 53756.66 15 16 calculate value of 25 begiining of year retirement payments at t=10 17 retirement payments at t=10 575551.64 18 19 calculate net amount needed at t=10 20 value of retirement payments 575551.64 21 value of savings 142041.82 22 net amount needed 433509.82 23 calculate annual savings needed for next 10 years 24 annual savings needed for retirement 28533.66 25 ... NPER APR CPI ear FVA s2 pva s3 STATE s6 s7 s8 s9 s4 MORTGAGE 51 55 s2 s11 s12 (=B17] [=B11] [=B20-B21) OR (=B17-B11] [=PMT(B8,B4,,-B22)] s13 s14 s15 s16 s17F 51 518f : ... Đ : 1