Question

You contribute $1,000 annually to a retirement account for eight years and stop making payments at the age of 25. Your twin brother (or sister . . . whichever applies) opens an account at age 25 and contributes $1,000 a year until retirement at age 65 (40 years). You both earn 10 percent on your investments. How much can each of you withdraw for 20 years (that is, ages 66 through 85) from the retirement accounts? PLEASE PROVIDE INPUTS AND WHAT TO SOLVE FOR IN THE FINANCIAL CALCULATOR DO NOT NEED FORMULAS

Answer 1

First, future value at the age of 25 of $1,000 contributed for eight years shall be calculated Annual interest rate, RATE Number of annuity payment, NPER Annual annuity payment Initial deposit in the account, PV Interest compounding type, TYPE FV at age 25 of eight $1,000 annuity 10% $1,000 $0 s, PMT 0-0 if annuity regular (at the end) ofeach year; 1 if annuity due (at the beginning)of each year $11,435.89 [Ref: NOTE-1] NOTE-1 FV at age 25 of eight $1,000 annuity is calculated using EXCEL FUNCTION FV(rate,nper,pmt,pv,type) where rate-10%; nper-8; pmt-1000, pv=0; type:0; Here, value for pmt is negative as it denotes cash inflow; type 0 because annuity payments occur at the end of each year only 1 Annual interest rate, RATE 2 Number of annuity payment, NPER 3 Annual annuity payments, PMT 4 Initial deposit in the account, PV 5 Interest compounding type, TYPE 6 FV at age 25 of eight $1,000 annuity 10% $1,000 $0 0 0 if annuity regular (at the end) of each year; 1 if annuity due (at the beginningl of each year FV(B1,B2,-B3,B4,B5) [Ref: NOTE-1]