Calculating Monthly Saving for the Retirement Fund
Not what you're looking for?
Looking for help and how you got the answer especially on how to break out the percentages.
You wish to retire in 20 years at which time you want to accumulate enough money to receive an annual annuity of 12,000 for 25 years after retirement. During the period before retirement you can earn 8 percent annually, while after retirement you can earn 10 percent on your money.
What annual contributions to the retirement fund will allow you to receive the 12,000 annuity?
Purchase this Solution
Solution Summary
The solution contains step-by-step calculations on how much a person should save monthly in order to guarantee a specific annuity payments from the retirement fund. While specific numbers are used in the solution, the instructions are clear enough for a student to substitute his or her own numbers.
Solution Preview
If you invest x dollars every year, then in the first year your total savings will be
x dollars
in second year
x(1+.08) + x
in third year
(x(1.08)+x)(1.08) + x
and so on... for twenty years.
By the end of twentieth year you will have
20x+19*1.08x+18*(1.08^2)x+...+1*(1.08^19)x
by factoring out x, you can add it all up to get
(367.7865)*x.
This is the total dollar ...
Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.