Question

Takashi plans to save $30,000 per year until he retires. his first savings contribution to his retirement account is expected in 1 year from today. Takashi plans to retire in 6 years from today, immediately after making his last $30,000 contribution to his retirement account. he then plans to be retired for 6 years. Takashi expects to earn 8.0% per year in his retirement account. both before and during his retirement. If takashi receives equal annual payments from his retirement account during his retirement with the first of these annual retirement payments received in 1 year after he retires and the last of these annual retirement payments received in 6 after he retires, then how much can takashi expect each of his annual retirement payments to be?

A. $30,000

b. $36,679.65

c. $47,606.23

d $23,114.40

none of the above

Answer 1

IF ANY QUERY, FEEL FREE TO ASK IN COMMENTS Solution Formula Future Value Formula Retirement Payment FV(interest rate,period, contribution) PMT(interest rate,period,-future value of contribution) 1 Future value of contribution Future value Formula $220,077.87 =FV(8%,6,-30000) 2 Annual retirement payments Payment Formula $47,606.23 =PMT(8%,6,-220077.87) Hence, option c. $47,606.23 is correct