Question:
Now you are 35 years old and want to have saved $2,000,000 in 30 years by starting your investment today. Thanks to your friend, you find a good fund that yields a rate of return of 10% during the investment horizon.
a) Assume you contribute your investments account on an annual basis. How large of a payment do you have to make each year?
b) When you reach 65 years old, you are happy that you achieve the goal of $2,000,000 in your investment account, but then the discount rate drop to 6% per year. You and your spouse decide to receive the payments on a monthly basis in the coming 25 years. What is your monthly payment for the retirement until you turn 90 years old?