You want to supplement your retirement income through a retirement account. You have 15 years left until retirement and you are going to make 15 equal annual deposits into your account until you retire with the first deposit being made at the end of year 1. You need to save enough so that you can make 10 annual withdrawals that will begin at the end of year 16. The first withdrawal will be $15,000, and each subsequent withdrawal will increase at a rate of 5% over the previous year's withdrawal in line with expected increase in cost-of-living. Your last withdrawal will be at the end of year 26. What is the amount of the equal annual deposit amount (C) for the first 15 years? Assume the interest rate is 12% compounded annually before and after you retire.
You want to supplement your retirement income through a retirement account. You have 15 years left until retirement and you are going to make 15 equal annual deposits into your account until you retire with the first deposit being made at the end of year 1. You need to save enough so that you can make 10 annual withdrawals that will begin at the end of year 16. The first withdrawal will be $15,000, and each subsequent withdrawal will increase at a rate of 5% over the previous year's withdrawal in line with expected increase in cost-of-living. Your last withdrawal will be at the end of year 26. What is the amount of the equal annual deposit amount (C) for the first 15 years? Assume the interest rate is 12% compounded annually before and after you retire.
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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Transcribed Image Text:You want to supplement your retirement income
through a retirement account. You have 15 years
left until retirement and you are going to make 15
equal annual deposits into your account until you
retire with the first deposit being made at the end
of year 1. You need to save enough so that you can
make 10 annual withdrawals that will begin at the
end of year 16. The first withdrawal will be $15,000,
and each subsequent withdrawal will increase at a
rate of 5% over the previous year's withdrawal in
line with expected increase in cost-of-living. Your
last withdrawal will be at the end of year 26. What
is the amount of the equal annual deposit amount
(C) for the first 15 years? ASsume the interest rate is
12% compounded annually before and after
retire.
you
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