Question

Question 9 O out of 1 points How much should be deposited each year into a retirement account starting now and continuing through year 9, if you want to be able to withdraw X $80,000 per year forever, at the beginning 30 years from now? i=10% per year. Fill in positive value. Selected Answer: 615385 Response Feedback: Find Pin year 29 using (P/F,1%,20) to move back to year 9, and then use (A/F,196,10) factor to find A P29=Awithdrawals / i ADeposit=P29 (P/F,10%,20) (A/F,1096,10)

Answer 1

There will be total 10 deposits (right now + 9 more)

Present value of withdrawal in EOY 29 = 80000 / 0.1 = 800000

Annual deposit required = 800000 * (P/F,10%,20) *(A/F,10%,10)

= 800000 * 0.148644 *0.062745

= 7461.33 ~ 7461 (Nearest Dollar)