Retirement annuity, You plan to retire in exactly 22 years.

Retirement annuity

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Reference no: EM131446784

You plan to retire in exactly 22 years. Your goal is to create a fund that will allow you to receive $6,000 at the end of each month for 25 years after retirement. You believe you will be able to earn 5% per year, compounded monthly during the 25-year retirement period.

a. How large a fund will you need when you retire in 22 years to provide the 25-year, $6,000 per month retirement annuity? (round to nearest dollar)

b. Now assume you have 22 years to retirement. How much will you need to save each month in end-of-month deposits to fund the retirement plan in part a…? Assume that your account earns interest monthly at an 8% annual rate (round to nearest dollar)

c. How much is $6,000 worth in today’s dollars if inflation is 2% per year? (round to nearest dollar)

Reference no: EM131446784

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