2. You have just turned 30 years old, have just received your MBA, and have accepted your first job. Now you decide to put 10% of your annual salary into your savings account to meet your two objectives after retiring: • First, you would like to be able to retire 30 years from now with a retirement income of $80,000 per year for 30 years, with the first payment coming 31 years from today and the last one 50 years from today. • Second, you would like to donate a constant amount of money (use C to denote this constant payment) to the cancer research foundation every year. The donation runs forever and the first payment to the foundation comes also 31 years from today. Assume that your starting salary is $ 85,000 per year. You will receive your first annual paycheck next year (when you are 31 years old) and it will grow 2% per year until you retire. Question How much can you donate to the cancer research foundation per year? (solve for C) Use 7% as annual discount rate.
2. You have just turned 30 years old, have just received your MBA, and have accepted your first job. Now you decide to put 10% of your annual salary into your savings account to meet your two objectives after retiring: • First, you would like to be able to retire 30 years from now with a retirement income of $80,000 per year for 30 years, with the first payment coming 31 years from today and the last one 50 years from today. • Second, you would like to donate a constant amount of money (use C to denote this constant payment) to the cancer research foundation every year. The donation runs forever and the first payment to the foundation comes also 31 years from today. Assume that your starting salary is $ 85,000 per year. You will receive your first annual paycheck next year (when you are 31 years old) and it will grow 2% per year until you retire. Question How much can you donate to the cancer research foundation per year? (solve for C) Use 7% as annual discount rate.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 34P
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Transcribed Image Text:2. You have just turned 30 years old, have just received your MBA, and have accepted your first
job. Now you decide to put 10% of your annual salary into your savings account to meet your
two objectives after retiring:
• First, you would like to be able to retire 30 years from now with a retirement income of
$80,000 per year for 30 years, with the first payment coming 31 years from today and the
last one 50 years from today.
Second, you would like to donate a constant amount of money (use C to denote this
constant payment) to the cancer research foundation every year. The donation runs forever
and the first payment to the foundation comes also 31 years from today.
Assume that your starting salary is $ 85,000 per year. You will receive your first annual paycheck
next year (when you are 31 years old) and it will grow 2% per year until you retire.
Question How much can you donate to the cancer research foundation per year? (solve for C')
Use 7% as annual discount rate.
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