You would like to have enough money saved to receive a level perpetuity of $70,000 with the first payment occurring one year after retirement. Assume that the interest rate is 10%.
a) How much would you need to save in your retirement fund to achieve this goal?
b) What is the equivalent present value of that amount 30 years before retirement?
c) What is the equivalent amount you would need to save each year assuming your salary will increase by 4%?
d) How much will you deposit in year 1?
e) How much will you deposit in year 2?