You want to supplement your retirement income through a retirement account. You have 15 years left until retirement and you are going to make 15 equal annual deposits into your account until you retire with the first deposit being made at the end of year 1. You need to save enough so that you can make 10 annual withdrawals that will begin at the end of year 16. The first withdrawal will be $15,000, and each subsequent withdrawal will increase at a rate of 5% over the previous year's withdrawal in line with expected increase in cost-of-living. Your last withdrawal will be at the end of year 26. What is the amount of the equal annual deposit amount (C) for the first 15 years? Assume the interest rate is 12% compounded annually before and after you retire.

You want to supplement your retirement income through a retirement account. You have 15 years left until retirement and you are going to make 15 equal annual deposits into your account until you retire with the first deposit being made at the end of year 1. You need to save enough so that you can make 10 annual withdrawals that will begin at the end of year 16. The first withdrawal will be $15,000, and each subsequent withdrawal will increase at a rate of 5% over the previous year's withdrawal in line with expected increase in cost-of-living. Your last withdrawal will be at the end of year 26. What is the amount of the equal annual deposit amount (C) for the first 15 years? Assume the interest rate is 12% compounded annually before and after you retire.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 44P

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