How much must you deposit each year into your retirement account starting now and continuing through...

Question

Question

Answer 1

Answer #1

Present value of perpetual series = A/i

Present value of withdrawal at EOY 25 = 80000/ 0.11 = 727272.73

Present value at EOY 0 = 727272.73 * (P/F,11%,25) = 727272.73 * 0.073608 = 53533.15

Let A be deposit starting now and continuing for 13 more years

Present value of deposits = A + A*(P/A,11%,13) = A + A*6.74987 = 7.74987 *A

Present value of deposits = Present value of withdrawal

7.74987 *A = 53533.15

A = 53533.15 / 7.74987

A = 6907.62

Answer 2

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