Exactly twenty years from now

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Mrs. Jones plans to retire exactly twenty years from now (), and she would like to have accumulated, by retirement, enough money to enjoy a $100,000 per year retirement income beginning in year 21 and continuing in perpetuity thereafter. So far, she has saved up $50,000, all in stocks (that is, at her pension account contains $50,000).

a. Construct a time line (table), in which the first row shows appropriate time periods, the second row shows Mrs. Jones's pension cashflows and the third row, shows contributions to her saving account (include the amount she has already saved as well).

b. What must her annual contributions be if she is to achieve her goal (assume she makes 20 payments)? On average, she expects to earn 10% on her money.

Reference no: EM131569328

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