Question

Consider a person who begins contributing to a retirement plan at age 25 and contributes for 40 years until retirement at age 65. For the first ten years, she contributes $3,300 per year. She increases the contribution rate to $5,300 per year in years 11 through 20. This is followed by increases to $10,300 per year in years 21 through 30 and to $15,300 per year for the last ten years. This money earns a return of 9 percent. First compute the value of the retirement plan when she turns age 65. (Round your answer to 2 decimal places.) Value Compute the annual payment she would receive over the next 40 years if the wealth was converted to an annuity payment at 8 percent. (Round your answer to 2 decimal places.) Annual payment

Answer 1

a. Value= $1,719,392.39
b. Annual payment= $144,188.52

Foymer las tutue value tmutty toctor: (v) a) C X C-Annual payment r nterest rat no no.o ea Value Retemment plan whan she tuns 65 CL.09)40 3300 x 30 1 2000xC1-09) 1 D. 09 O-O9 + (10, 300-530on(.09)- 1 +(15,300- 10,300) x O.o /० o-01 = $, +19,342- 3 Present value Annuity tactor (PU) PV -Cx C x1-CI-08)yo $1719, 392.39 O. 08 C$144,188.52