Your friend is celebrating his 25th birthday today and wants to start saving for his retirement at age 65. He wants to be able to withdraw $100,000 from his savings account each birthday for 20 years following his retirement, and the first withdrawal will be on his 66th birthday. Your friend wants to invest his savings in the local bank, which offers 6 percent interest per year, and he wants to make equal annual payments on each birthday into his bank account. What amount should be deposited annually by your friend in order to withdraw $100,000 every year after retirement? Please show your work.
Your friend is celebrating his 25th birthday today and wants to start saving for his retirement at age 65. He wants to be able to withdraw $100,000 from his savings account each birthday for 20 years following his retirement, and the first withdrawal will be on his 66th birthday. Your friend wants to invest his savings in the local bank, which offers 6 percent interest per year, and he wants to make equal annual payments on each birthday into his bank account. What amount should be deposited annually by your friend in order to withdraw $100,000 every year after retirement? Please show your work.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 42P
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Question
Your friend is celebrating his 25th birthday today and wants to start saving for his retirement at age 65. He wants to be able to withdraw $100,000 from his savings account each birthday for 20 years following his retirement, and the first withdrawal will be on his 66th birthday. Your friend wants to invest his savings in the local bank, which offers 6 percent interest per year, and he wants to make equal annual payments on each birthday into his bank account.
What amount should be deposited annually by your friend in order to withdraw $100,000 every year after retirement? Please show your work.
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