Your friend is celebrating his 25th birthday today and wants to start saving for his retirement at age 65. He wants to be able to withdraw $100,000 from his savings account each birthday for 20 years following his retirement, and the first withdrawal will be on his 66th birthday. Your friend wants to invest his savings in the local bank, which offers 6 percent interest per year, and he wants to make equal annual payments on each birthday into his bank account. What amount should be deposited annually by your friend in order to withdraw $100,000 every year after retirement? Please show your work.
Your friend is celebrating his 25th birthday today and wants to start saving for his retirement at age 65. He wants to be able to withdraw $100,000 from his savings account each birthday for 20 years following his retirement, and the first withdrawal will be on his 66th birthday. Your friend wants to invest his savings in the local bank, which offers 6 percent interest per year, and he wants to make equal annual payments on each birthday into his bank account. What amount should be deposited annually by your friend in order to withdraw $100,000 every year after retirement? Please show your work.
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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Your friend is celebrating his 25th birthday today and wants to start saving for his retirement at age 65. He wants to be able to withdraw $100,000 from his savings account each birthday for 20 years following his retirement, and the first withdrawal will be on his 66th birthday. Your friend wants to invest his savings in the local bank, which offers 6 percent interest per year, and he wants to make equal annual payments on each birthday into his bank account.
What amount should be deposited annually by your friend in order to withdraw $100,000 every year after retirement? Please show your work.
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