Question

6) You would like to have $5 million dollars when you retire at age 65. You are 25 years old and you want to make your first savings payment immediately. You have not saved any money for your retirement as of yet. Assume interest rate is 7%, how much money must you set aside per year until and including your 65th birthday? 7) You are now 25 years old. You would like to retire when you are 65 years old. You want to receive starting at 65 an annual income of $150,000 per year until you are 95. How much money must you have in your retirement account when you are 65? Assume you can earn 4% per annum. 8) You can afford to pay $375 monthly car payments. Assume an annual interest rate of 6%, and assume 60 monthly payments. You can afford to put down $3,000. Can you afford to buy a car that costs $30,000?

Can you please solve these on Excel and show me how you solved it. Thank you so much.

Answer 1

Answers: - Solve using PMT and PV function in excel for these questions 6) Yearly savings amount: Rate of interest (rate) = 0.07 Years untill retirement = 65 age - 25 age = 40 Present value (PV) = 0 (not required) Savings required Future value (FV) = 5,000,000 Use PMT function to solve this: =PMT(0.07,40,0,-5000000,0) PMT(rate, nper, pv, [fv], [type]) Yearly saving amount: $25,045.69



7) Amount required in retirement account at age 65: Rate of interest (rate) = 0.04 Years post retirement = 95 age (expected life) - 65 age = 30 Income required each year (PMT) = 150,000 Future value (FV) = 0 (not required) Use PV function to solve this: =PV(0.04,30,-150000,0) PV (rate, nper, pmt, [fv], [type]) Amount required in retirement account at retirement: $2,593,805