You plan to retire in exactly 20 years' time and expect to live for 30 years after you retire. In order to do this you plan to save $20,000 every year for the next 20 years and put this money into a term deposit account at the end of each year, which pays 6%p.a. and compounds interest annually. Your first deposit will go into the account at the end of this year. a) How much money will you have in the account when you retire in 20 years' time? b) How much will you be able to take out every year to live on during retirement if you withdraw each year's amount at the beginning of that year? c) If you started the deposit immediately, instead of the end of the year, and continued making deposits at the start of each year, how much would be in your retirement account and how much would you have to live on, each year in retirement?
You plan to retire in exactly 20 years' time and expect to live for 30 years after you retire. In order to do this you plan to save $20,000 every year for the next 20 years and put this money into a term deposit account at the end of each year, which pays 6%p.a. and compounds interest annually. Your first deposit will go into the account at the end of this year. a) How much money will you have in the account when you retire in 20 years' time? b) How much will you be able to take out every year to live on during retirement if you withdraw each year's amount at the beginning of that year? c) If you started the deposit immediately, instead of the end of the year, and continued making deposits at the start of each year, how much would be in your retirement account and how much would you have to live on, each year in retirement?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You plan to retire in exactly 20 years' time and expect to live for 30 years after you retire.
In order to do this you plan to save $20,000 every year for the next 20 years and put this money into a
term deposit account at the end of each year, which pays 6%p.a. and compounds interest annually.
Your first deposit will go into the account at the end of this year.
a) How much money will you have in the account when you retire in 20 years' time?
b) How much will you be able to take out every year to live on during retirement if you withdraw
each year's amount at the beginning of that year?
c) If you started the deposit immediately, instead of the end of the year, and continued making
deposits at the start of each year, how much would be in your retirement account and how
much would you have to live on, each year in retirement?
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