Question

Jennifer is the owner of a video game and entertainment software retail store. She is currently planning to retire in 30 years and wishes to withdraw $14,000/month for 20 years from her retirement account starting at that time. How much must she contribute each month for 30 years into a retirement account earning interest at the rate of 2%/year compounded monthly to meet her retirement goal? (Round your answer to the nearest cent.)

Answer 1

Calculating Present Value at retirement,

using TVM Calculation,

PV = BEG[FV = 0, PMT = 14,000, N = 240, I = 0.02/12]

PV = $2,772,048.88

Calculating Monthly Deposit,

Using TVM Calculation,

PMT = [PV = 0, FV = 2,772,048.88, N = 360, I = 0.02/12]

PMT = $5,625.95