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    Time Value of Money

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    IRA Investments develops retirement programs for individuals. You are 30 years old and plan to retire on your 60th birthday. You want to establish a plan with IRA that will require a series of equal, annual, end-of-year deposits into the retirement account. The first deposit will be made 1 year from today on your 31st birthday. The final payment on the account will be made on your 60th birthday. The retirement plan will allow you to withdraw $120,000 per year for 15 years, with the first withdrawal on your 61st birthday. Also at the end of the 15th year, you wish to withdraw an additional $250,000. The retirement account promises to earn 12 percent annually.

    What periodic payment must be made into the account to achieve your retirement objective?

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    https://brainmass.com/business/annuity/periodic-payment-made-account-achieve-221039

    Solution Preview

    "IRA Investments develops retirement programs for individuals. You are 30 years old and plan to retire on your 60th birthday. You want to establish a plan with IRA that will require a series of equal, annual, end-of-year deposits into the retirement account. The first deposit will be made 1 year from today on your 31st birthday. The final payment on the account will be made on your 60th birthday. The retirement plan will allow you to withdraw $120,000 per year for 15 years, with the first withdrawal on your 61st birthday. Also at the end of the 15th year, you wish to withdraw an additional $250,000. The retirement account promises to earn 12 percent ...

    Solution Summary

    The expert calculates the value of an annuity to achieve retirement objective.

    $2.19