Question

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Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $50,000 has today. He wants all his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes that if inflation occurs the real value of his retirement income will decline year by year after he retires). His retirement income will begin the day he retires, 10 years from today, and he will then receive 24 additional annual payments. Inflation is expected to be 4% per year from today forward. He currently has $150,000 saved and expects to earn a return on his savings of 8% per year with annual compounding.
How much must he save during each of the next 10 years (with equal deposits being made at the end of each year, beginning a year from today) to meet his retirement goal? (Note: Neither the amount he saves nor the amount he withdraws upon retirement is a growing annuity.) Do not round intermediate calculations. Round your answer to the nearest dollar.
$ ________

spreadsheet photos just for reference. I need to find the highlighted number above

1 Paste a. A . A $ -% S Conditional Formatting For as Ta In Undo/ Clipboard Font Alignment Number Tables C21 IDE 1 Required Annuity Payments Father's current age Number of years until retirement Number of years living in retirement 25 1st retirement payment, same purchasing power today as Inflation rate Current savings at t = 0 Percentage return earned $50,000 4.00% $150,000 8.00% 9 10 12 Step 1. Calculate retirement payments, beginning at t = 10 13 Fixed retirement payments Formulas #N/A 15 Step 2. Calculate the value of current savings at t = 10 Sheet1 Saved to Cengage

Answer 1

Question Equation Answer Explanation =Purchasing Power as of today x (1 + inflation) where, Purchasing Power af today = 50,000 1. Calculate retirement payments, beginning at t=10 =50000*(1+4%) 0 $ Nis number of years till retirement, N = 10 74,012.21 inflation = 496 =Current Saving x (1+ percentage return earned) where, current saving = 150,000 2. Calculate the value of Current Saving at t=10 =150000*(1+8%) 10 $ 323,838.75 Nis number of years till retirement, N = 10 percentage return earned = 896 3. Calculate the value of annuity due of retirement at at = 10 Unable to understand the language of question Find the PV with excel formula, where rate= return % - inflation% =PV(8%-4%,25,-74012.21,,) $1,156,224.66 nper = 25 years PMT = earlier calculated Annuity Retirement payments 4. Net amount needed in 10 years Find periodic saving using PMT excel formula, where rate will be inflation nper = 25 years pv=initial saving of 150,000 fv=calculated net amount needed which is fr calculated in step 4 =PMT(8%,10,150000,-1156224.66) $57,459.17