Problem
A couple will retire in 50 years; they plan to spend about $30,000 a year in retirement, which should last about 25 years. They believe that they can earn 8% interest on retirement savings.
Required:
1) If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year.
2) Would the answer to part 1) change if the couple also realize that in 20 years, they will need to spend $60,000 on their child's college education?
3) Explain what the time value of money is and why it is so important in the field of finance.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.