1. Your financial planner has advised you to initiate a retirement account while you are still young. Today is your 35th birthday and you are planning to retire at age 65. Actuarial tables show that individuals in your age group have a life expectancy of about 75. If you want a $50,000 annuity beginning on your 66th birthday which will grow at a rate of 4 percent per year for 10 years: a. What amount must you deposit at the end of each year through age 65 at a rate of 8 percent compounded annually to fund your retirement account? b. How would your answer change if the rate is 9 percent? ¢. After you have paid your last installment on your 65th birthday, you learn that medical advances have shifted actuarial tables so that you are now expected to live to age 85. Determine the base-year annuity payment supportable under the 4 percent growth plan with a 9 percent interest rate. 1. Your financial planner has advised you to initiate aretirement account while you are still young. Today isyour 35th birthday and you are planning to retire atage 65. Actuarial tables show that individuals in yourage group have a life expectancy of about 75. If youwant a $50,000 annuity beginning on your66th birthday which will grow at a rate of 4 percentper year for 10 years:a. What amount must you deposit at the end of eachyear through age 65 at a rate of 8 percentcompounded annually to fund your retirementaccount?b. How would your answer change if the rate is 9percent?c. After you have paid your last installment on your65th birthday, you learn that medical advances haveshifted actuarial tables so that you are now expectedto live to age 85. Determine the base-year annuitypayment supportable under the 4 percent growthplan with a 9 percent interest rate.

The time value of money is the concept that is used by the companies to determine the present worth…

Answered: 1. Your financial planner has advised…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. Your financial planner has advised you to initiate a retirement account while you are still young. Today is your 35th birthday and you are planning to retire at age 65. Actuarial tables show that individuals in your age group have a life expectancy of about 75. If you want a $50,000 annuity beginning on your 66th birthday which will grow at a rate of 4 percent per year for 10 years: a. What amount must you deposit at the end of each year through age 65 at a rate of 8 percent compounded annually to fund your retirement account? b. How would your answer change if the rate is 9 percent? ¢. After you have paid your last installment on your 65th birthday, you learn that medical advances have shifted actuarial tables so that you are now expected to live to age 85. Determine the base-year annuity payment supportable under the 4 percent growth plan with a 9 percent interest rate.

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