How much should the investor deposit annually

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An investor who has just turned 35 wants to save for his retirement. He plans to retire on his 65th birthday and wants a monthly income, beginning the month after his 65th birthday, of $2,000 (after taxes) until he dies. Moreover, assume that:

- He will die at age 95.
- Until he reaches age 65, the account earns 8% interest, compounded annually, which accumulates tax-free.
- At age 65, assume that the interest accumulated in the account is taxed as a lump sum at a rate of 30%.
- Thereafter, the investor is in a 0% tax bracket and the interest on his account earns 7%,compounded monthly.

How much should the investor deposit annually in his account beginning on his 35th birthday and ending on his 64th birthday to finance his retirement?

Reference no: EM13330289

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