Question

Meg's pension plan is an annuity with a guaranteed return of 6% per year (compounded quarterly). She would like to retire with a pension of $30,000 per quarter for 15 years. If she works 35 years before retiring, how much money must she and her employer deposit each quarter? HINT [See Example 5.] (Round your answer to the nearest cent.) $___________ Please display the exact way to input everything in the calculator

Answer 1

Quarterly rate = 6%/4 = 1.5%

Amount required on retirement = 30,000*PVAF(1.5%, 60 periods)

= 30,000*39.380

= $1,181,400

Let the amount Deposited each quarter be x

X*[{(1+0.015)¹⁴⁰-1}/0.015] = 1,181,400

469.32x = 1,181,400

X = $2,517.26

Hence, amount required to be deposited each quarter = $2,517.26