A couple will retire in 50 years; they plan to spend about $30,000 a year in retirement, which should last about 25 years. They believe that they can earn 10 percent interest on retirement savings.If they make annual payments into a savings plan, how much will they need to save each year? Assume, the first payment comes in at the beginning of the year.How would the answer to part (a) change if the couple also realize that in 20 years, they will need to spend $ 60,000 on their child’s college education?

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Answered: A couple will retire in 50 years; they…

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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A couple will retire in 50 years; they plan to spend about $30,000 a year in retirement, which should last about 25 years. They believe that they can earn 10 percent interest on retirement savings.

If they make annual payments into a savings plan, how much will they need to save each year? Assume, the first payment comes in at the beginning of the year.
How would the answer to part (a) change if the couple also realize that in 20 years, they will need to spend $ 60,000 on their child’s college education?

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