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You want to receive $5000 per month for 20 years in real dollars in an account...

  1. You want to receive $5000 per month for 20 years in real dollars in an account when you retire in 35 years. The first monthly payment to be received 1 month after you retire. The nominal return on your investment is 9.94 percent and the inflation rate is 3.2 percent. What is the real amount you must deposit each year for 35 years to achieve your goal? (Answer in Excel please).
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Answer #1

Please see the snapshot of my excel file. Since you have asked for working in excel I am providing the snapshot. In the last column I have also reproduced the formula in the each cell. This will help you roll it in excel yourself.

Final answer is $ 5,357.60

Value Remarks Formula used 1 Parameter 2 Nominal return 3 Inflation rate 4 Real Return 5 Real Return per month 9.94% 3.20% 6.53%)-(1H2)/(lt 3-1 0.54%) -4/12 7 Calculation of retirement kity required when you retire in 35 years 8 Monthly payment required 9 Period (Nos of months) 10 PV of annuity 11 Retirement Kitty required 12 13 Calculation of annuity whose future value will produce this kitty 35 years later 14 Period 15 Sum of FV factor 16 Annuity 17 5,000 240 20 12 668,986 PV(J5,J9,-J8) 668,986 J10 35 years 124.87 |-((1H4)AJ14-11/14 5,357.60 J11/J15 What is the real amount you must deposit each year for 355,357.60 years to achieve your goal? 16 18

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