Question

4. Show work please!

Your friend currently has $10,000 in an IRA (Individual Retirement Account) and estimate that it will earn 6%/year. She is now 35 years old and plans to retire when she is 65 years old. If she wants $1,000,000 in the account in 30 years, how much more does she have to deposit every year to have the $1,000,000 total?

Answer 1

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ALL FORMULAS ARE SHOWN. JUST WRITTEN IN EXCEL. NO EXCEL FUNCTION IS USED.

24- 01- Home Insert Page Layout File Formulas Data PV, FV. ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) Review View Add-Ins Define Name - Trace Precedents Show Formulas O P Use in Formula - Trace Dependents Error Checking Math More Name Watch & Trig Functions Manager at Create from Selection Remove Arrows Evaluate Formula Window Defined Names Formula Auditing Calculate Now Insert Function AutoSum Recently Financial Logical Text Date & Lookup & Used- Time Reference Function Library Calculation Calculate Sheet Options Calculation CZ512 CU CV CW CX CY DA DB DC WE HAVE 10000 AT PRESENT FIRST WE CALCULATE HOW MUCH 10000 IS WORTH AT THE END OF 30 YEARS 506 507 508 509 510 511 512 513 514 515 516 517 FV = PV*(1+r)^n FV= 10000*(1+0.06)^30 = 57434.91 SO NOW WE NEED TO ACCUMULATE THE BALANCE AMOUNT 1000000 - 57434.91 = 942565.09 FVA = 942565.09 518 519 FVA = A*(1/r)*((1+r)^n - 1) <---- FUTURE VALUE OF ANNUITY 520 942565.09 = A*(1/0.06)*((1+0.06)^30 - 1) 521 942565.09 = A*79.05818622 522 A =942565.09/79.05818622 523 ANSWER A = 11922.42 <------- DEPOSIT EVERY YEAR 524 HE LOAN OPTIONS pv, fv, annuity CAP STRU VALUE profit margin symbols LOCK BOX Ret ferences DILUTION DOLLAR COST AVG MORTGAGE EXPO pva NPER APR CPI ear FVA 20 94 Shel 130% 0 + 6. % ENG