Same annual income during retirement

Assignment Help Financial Management

Reference no: EM131077844

Assume that your father is now 50 years old, that he plans to retire in 10 years, and that he expects to live for 25 years after he retires, that is, until he is 85. He currently earns $40,000 per year and would like the same annual income during retirement. His retirement income will begin the day he retires, 10 years from today, and he will then get 24 additional annual payments at the beginning of each year. He currently has $100,000 saved up and he expects to earn a return on his savings of 8 percent per year, annual compounding. To the nearest dollar, how much must he save during each of the next 10 years (with deposits being made at the end of each year) to meet his retirement goal? I need excel formula for this problem as well as a cash flow diagram.

Reference no: EM131077844

Questions Cloud

Describe three modeling techniques : List and describe three modeling techniques that meet the informational needs of stakeholders to ensure full coverage of a business domain.

Proposal the cost-benefit analysis tableau for your proposal : How would you set up a cost-benefit analysis of a program to reduce air pollution in a city? Indicate the items you would include as costs and benefits, and discuss the problems encountered in measuring these benefits and costs. Write a three page re..

What coupon rate should the dairy delight set on its bonds : The Dairy Delight wants to raise $1.0 million by selling some coupon bonds at par. Comparable bonds in the market have a 6.5 percent annual coupon, 15 years to maturity, and are selling at 98 percent of par. What coupon rate should The Dairy Delight ..

Deciding when to invest in new machine : Your company is deciding when to invest in a new machine. The new machine will increase cash flow by $240,000 per year. You believe the technology used in the machine has a 10-year life; The cost of the machine will decline by $120,000 per year until..

Same annual income during retirement : Assume that your father is now 50 years old, that he plans to retire in 10 years, and that he expects to live for 25 years after he retires, that is, until he is 85. He currently earns $40,000 per year and would like the same annual income during ret..

Calculate the expected rate of return and standard deviation : Escapists Film Corp. sells home videos. in a boom economy its rates of return is negative 28%, in a normal economy it's rate of return is 8% and in a recession it's rate of return is 48%. all three possible states of the economy are equally likely. c..

European-style options on foreign currencies trade : European-style options on foreign currencies trade at the Philadelphia Exchange. A call option on sterling with an exercise price of 0.925 £/$ and a time to expiration of 3 months has a price of 0.0125 £/$. Is there an arbitrage opportunity? If there..

Bank pays quoted annual interest rate : A bank pays a quoted annual (simple) interest rate of 8 percent. However, it pays interest (compounds) daily using a 365-day year. What is the effective annual rate of return?

Effective in creating and monitoring an operating budget : Discuss which financial management practices are most effective in creating and monitoring an operating budget.

User Account

All Pages