IRA Investments develops retirement programs for individuals. You are 30 years old and plan to retire on your 60th birthday. You want to establish a plan with IRA that will require a series of equal, annual, end-of-year deposits into the retirement account. The first deposit will be made one year from today on your 31st birthday.
The final payment on the account will be made on your 60th birthday. The retirement plan will allow you to withdraw $120,000 per year for 15 years, with the first withdrawal on your 61st birthday. Also, at the end of the 15th year, you wish to withdraw an additional $250,000. The retirement account promises to earn 12 percent annually.
What periodic payment must be made into the account to achieve your retirement objective?