You want to save an equal amount each year for the next 38 years, at which...
You want to save an equal amount each year for the next 38 years, at which time you will retire. What amount of annual savings are needed if you desire a retirement income of $55,000 a year for 25 years and earn 7.5 percent, compounded annually? Select one:
A. $2,889.04
B. $3,333.33
C. $2,640.85
D. $3,406.16
E. $3,146.32
Homework Answers
Answer: Option E: $3146.32
Total of PV of Retirement income at end of 38 years= 55000*(1-(1+7.5%)^-25)/7.5%=$613082.02
Let be X saving each year
So FV of X each year =613082.02
X*((1+7.5%)^38-1)/7.5%=613082.02
X=$3146.32
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