How many years will your saving account last

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Reference no: EM131815201

You are 20 years old now and planning to provide for your old age.

(i) Suppose, starting from next year, you deposit $3,000 each year into a savings account for 40 years at an effective annual interest rate 5%/year. What will you have in your saving account when you are 60 years old?

(ii) At age 61, you will withdraw $40,000 to finance your consumption, and your withdrawal will grow at the rate of 3%/year to adjust for inflation. Suppose the effective annual interest rate is still 5%/year. How many years will your saving account last?

Reference no: EM131815201

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