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What amount must she deposit monthly

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-Your friend is celebrating her 50th birthday today and wants to start saving for her anticipated retirement at age 68. She wants to be able to withdraw $10,000 from her savings account each month for 20 years following her retirement; the first withdrawal will be made one month after retirement. Your friend intends to invest her money in the local credit union, which offers 6% interest per year. She wants to make equal monthly payments into the account established at the credit union for her retirement fund.

a. If she starts making these deposits one month from her 50th birthday and continues to make monthly deposits until she is 68 (the last deposit will be on her 68th birthday), what amount must she deposit monthly to be able to make the desired withdrawals at retirement?

b. If she starts making these deposits on her 50th birthday and continues to make monthly deposits until she is one month shy of 68 (the last deposit will be made one month before her 68th birthday), what amount must she deposit monthly to be able to make the desired withdrawals at retirement?

c. Suppose your friend has just inherited a large sum of money. Rather than making equal monthly payments, she has decided to make one lump-sum payment on her 50th birthday to cover her retirement needs. What amount does she have to deposit?

d. Suppose your friend's employer will contribute $200 to the account every month as part of the company's profit-sharing plan. In addition, your friend expects a $50,000 distribution from a family trust fund on her 60th birthday, which she will also put into the retirement account. What amount must she deposit monthly now to be able to make the desired withdrawal at retirement?

Reference no: EM132803192

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