You wish to retire after 30 years, at which time you want to have accumulated enough money to receive an annuity of $60,000 a year for 22 years of retirement. During the period before retirement, you can earn 8% annually, and after retirement, you can earn 6% on your money.
a) What annual contributions to the retirement fund will allow you to receive the $60,000 annually?
b) What annual contributions are required if the contributions are made at the beginning of each year?
Note: There are solutions within the database for this type of question however, each OTA uses a different formula to calculate and the answers appear to be different. I would like to know the steps I would take using a financial calculator.© BrainMass Inc. brainmass.com October 9, 2019, 11:23 pm ad1c9bdddf
1. Set calculator to BGN from END
Compute the present value of 60000 received at the beginning of a year for 22 years
2. Press 2nd Clr TVM
3. Input 60000 PMT
4. Input 6% I/Y
5. Input 22 ...
This solution provides calculations for annual contributions.