Problem: A friend is celebrating his 35th birthday today and wants to start saving for his retirement at age 65. He wants to be able to withdraw $10,000 from his savings account on each birthday for 10 years following his retirement; the first withdrawal will be on his 66th birthday. He wants to invest his money in the local savings bank, which offers 8 percent interest per year. He wants to make equal, annual payments on each birthday in a new savings account he will establish for his retirement fund.
1) If he starts making these deposits on his 36th birthday and continues to make deposits until he is 65 (last deposit on his 65th birthday), what amount must he deposit annually to be able to make the desired withdrawals on retirement?
2) What would be the lump sum payment on his 36th birthday?