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Retirement annuity problem

Ms. Amidala Inflamada is celebrating today her birthday and 15th anniversary as the Executive Secretary for Mr. Num Bei Wan, President of Last Chance, Inc. During the day she was talking to her closest friends how turbulent where the first days she came in to work after her graduation from the University when she was only 22 years old. One of her friends asked her if she have planned for her retirement. She replied that she has to establish a retirement plan that should provide for her needs after her retirement, considering that probably she will be alone and maybe the Social Security will not be around any more.

For a female her age and ethnic group, the life expectancy is 85 years and according to new rules her retirement age should be 65. She thinks that she will do fine with a monthly pension payment of $3,500.00.

How much should Ms. Inflamada deposit every end of month starting this same month in order to accumulate the proper amount to fund her pension payments after her retirement? Assume that she can obtain a 9% average return on her deposits and on her funds accumulated on her retirement plan.

(Provide all computations for this problem in addition to the solution.)

The computations of the problem are ok. I need to find the factors of the PVIFA (240,9%/12) and the FVIFA (9%/12, 336). The procedure is ok but when I go to the PVIFA and FVIFA tables i don't find the factor number for (240,9%/12) and (9%/12, 336). I need to be more specific in the numbers and formulas to get the factors. Where was the equation to get $ 257.91? How I can find on the tables the line with the period and percent?

Solution Preview

I am attaching the excel file I use for getting the values of PVIFA and FVIFA. Please see the entires in red. Whenever I need for any period and rate, I enter the period and change the rate on top.

We first find out ...

Solution Summary

The solution explains how much savings are needed to give a predetermined amount during retirement