How confident you have in meeting your goal

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You plan to retire in the next 30 years. At retirement, your goal is to spend five years travelling around the world. To achieve this, you want to place an annual deposit (end-of-year) in an investment account for the next 30 years. The last deposit will be on the day just before you retire. To ensure that you can travel in style, on the first day of retirement, you will immediately withdraw $250,000 per year for the next five years.

You believe your investment can earn 10% (APR) during the whole period concerned.

(a) Compute the annual deposit each year:

i) Draw the necessary time line(s);

ii) Show all equations and workings.

(b) In your savings plan, how confident you have in meeting your goal. In other words, what factor(s) may prevent you from reaching your goal?

Reference no: EM133072877

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