(From section 6.2) You want to be able to withdraw $50,100 from your account each year for 20 years after you retire. You expect to retire in 35 years. If your investment account earns 5.5% interest, how much will you need to deposit into the account at the end of each year until you reach retirement to achieve your retirement goals? (a) The first part is finding how much we need to have in the account by the time we retire. Which formula will you use first? Circle one. Annuity Payout-Annuity (b) What are the following variables that we will need for the formula? PMT = n = t = A or Po = r = (c) Write the formula you will use with the numbers plugged in below.
(From section 6.2) You want to be able to withdraw $50,100 from your account each year for 20 years after you retire. You expect to retire in 35 years. If your investment account earns 5.5% interest, how much will you need to deposit into the account at the end of each year until you reach retirement to achieve your retirement goals? (a) The first part is finding how much we need to have in the account by the time we retire. Which formula will you use first? Circle one. Annuity Payout-Annuity (b) What are the following variables that we will need for the formula? PMT = n = t = A or Po = r = (c) Write the formula you will use with the numbers plugged in below.
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...
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Transcribed Image Text:(f) Now that we've answered the first part of the problem. We still need to find how much we will
deposit into the account each year while still working to reach our goal. Which formula will
you use for the second part? Circle one.
Annuity
Payout-Annuity
(g) What are the following variables that we will need for the formula?
PMT =
n =
t =
A or Po =
r =
(h) Write the formula you will use with the numbers plugged in below.
(i) Solve using your calculator or technology and round to two decimal places. Work is not
required here. Write the answer here and state which variable you solved for.
(j) Using your own words, describe what you found by solving the equation in terms of the word
problem given.
Transcribed Image Text:2. (From section 6.2) You want to be able to withdraw $50,100 from your account each year for 20
years after you retire. You expect to retire in 35 years. If your investment account earns 5.5%
interest, how much will you need to deposit into the account at the end of each year until you
reach retirement to achieve your retirement goals?
(a) The first part is finding how much we need to have in the account by the time we retire.
Which formula will you use first? Circle one.
Annuity
Payout-Annuity
(b) What are the following variables that we will need for the formula?
PMT =
n =
t =
r =
A or Po =
(c) Write the formula you will use with the numbers plugged in below.
(d) Solve using your calculator or technology and round to two decimal places. Work is not
required here. Write the answer here and state which variable you solved for.
(e) Using your own words, describe what you found by solving the equation in terms of the word
problem given.
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