You have just turned 22, and you intend to start saving for your retirement. You plan to retire in 41 years when you turn 63. During your retirement you would like to have an nnual income of $165,000 per year for the next 28 years (until age 91).
? Calculate how much has to be in your account before the first withdrawal at age 64.
? Calculate how much would have to save annually between now and age 63 in order to finance your retirement income and to fill that account.
Make the following assumptions:
? Assume that the relevant compounded interest rate is 9 percent for all 69 years.
? You make the first payment today and the last payment on the day you turn 63.
? You make the first withdrawal when you turn 64 and the last withdrawal when
you turn 91.
PROBLEM # 2:
You just took a $125,000, seven-year loan. Payments at the end of each month are flat
(equal in every month) at an annual interest rate of 4.75 percent.
Calculate the monthly payment.
Provide the appropriate loan table, showing the breakdown in each month between
principal repayment and interest.