Oshri is planning on his retirement, so he is setting up a payout annuity with his bank. He is now 30 years old, and he will retire when he's 60. He wants to receive annual payouts for 25 years, and he wants those payouts to receive an annual COLA of 3.5%. A. He wants his first payout to have the same purchasing power as does $13,000 today. How big should that payout be if he assumes inflation of 3.5% per year?

Oshri is planning on his retirement, so he is setting up a payout annuity with his bank. He is now 30 years old, and he will retire when he's 60. He wants to receive annual payouts for 25 years, and he wants those payouts to receive an annual COLA of 3.5%. A. He wants his first payout to have the same purchasing power as does $13,000 today. How big should that payout be if he assumes inflation of 3.5% per year?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter14: Planning For Retirement

Section: Chapter Questions

Problem 2FPE

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Shelly Franks is planning for her retirement, so she is setting up a payout annuity with her bank. She is now 25 years old, and she will retire when she is 65. She wants to receive annual payouts for twenty years, and she wants those payouts to receive an annual COLA of 2.8%. (a) She wants her first payout to have the same purchasing power as does $14000 today. How big should that payout be if she assumes inflation of 2.8% per year? (b) How much money must she deposit when she is 65 if her money earns 8.1% interest per year? (c) How large a monthly payment must she make if she saves for her payout annuity with an ordinary annuity? (The two annuities pay the same interest rate.) (d) How large a monthly payment would she make if she waits until she is 30 before starting her ordinary annuity?
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