document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1139409>Question 1139409</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Hi first of all I want to say thank you to the tutors who have helped me so far. You all are lifesavers and I do not know what I would do without your help and this site. <BR>\n" );
document.write( "I am having trouble figuring out the answer for an annuity. Can anyone help me please?\r<BR>\n" );
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document.write( "You plan to work for 40 years and then retire using a 25-year annuity. You want to arrange a retirement income of $4400 per month. You have access to an account that pays an APR of 7.2% compounded monthly.<BR>\n" );
document.write( "What size nest egg do you need to achieve the desired monthly yield?  </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #759880 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=759880\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> a TVM calculator should have helped you to solve this.\r<BR>\n" );
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document.write( "the online calculcator that imost always use, other than the TI Business Analyst II that i have at home, can be found at <a  rel=nofollow HREF= \"https://arachnoid.com/finance/\" target = \"_blank\">https://arachnoid.com/finance/</a>\r<BR>\n" );
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document.write( "using this calclator, i did the f9ollowing.\r<BR>\n" );
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document.write( "you plan to work for 40 years and then retire using a 25 year annuity.\r<BR>\n" );
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document.write( "you want to arrange a retirement income of $4400 per month.\r<BR>\n" );
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document.write( "you have access to an account that pays an APR of 7.2% compounded monthly.\r<BR>\n" );
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document.write( "what size nest egg do you need to achieve the desired monthly yield?\r<BR>\n" );
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document.write( "the nest egg you need in 40 years would be the present value of the annuity.\r<BR>\n" );
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document.write( "this nest egg have to give you $4400 per month for 25 years after you retire.\r<BR>\n" );
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document.write( "using the TVM calculator i referenced, your inuts would be:\r<BR>\n" );
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document.write( "present value = 0<BR>\n" );
document.write( "future value = 0<BR>\n" );
document.write( "number of time periods = 25 years * 12 months per year = 300 months.<BR>\n" );
document.write( "payment each month is equal to $4400.<BR>\n" );
document.write( "this amount is shown as positive because it will be money coming in to you.<BR>\n" );
document.write( "the present value will be shown as negative because it's money that you need to invest at the beginning of your retirement period.<BR>\n" );
document.write( "interest rate per time period = 7.2% per year / 12 = .6% per month.<BR>\n" );
document.write( "payment is normally at the end of each month, so that's what we'll use.\r<BR>\n" );
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document.write( "you make your inputs and you click on prevent value (pv) and the calculator tell you that the present value of the annuity needs to be equal to $611,460.42.\r<BR>\n" );
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document.write( "that's the nest egg that you have to have when you retire so you can receive a steady stream of $4400 payments at the end of each month for the next 25 years after you retire.\r<BR>\n" );
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document.write( "that nest egg needs to be there when your retirement starts.\r<BR>\n" );
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document.write( "since that's 40 years away, you need to establish an annuity that will provide you with that nest egg 40 years into the future.\r<BR>\n" );
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document.write( "you use the same TVM calculator.\r<BR>\n" );
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document.write( "this time, you make the following inputs.\r<BR>\n" );
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document.write( "present value = 0<BR>\n" );
document.write( "future value =  $611,460.42.<BR>\n" );
document.write( "this is shown as positive because it's money that you will need to have come in to you in 40 years.<BR>\n" );
document.write( "number of time periods = 40 years * 12 months per year = 480 months.<BR>\n" );
document.write( "interest rate per time period = 7.2% per year / 12 = .6% per month.<BR>\n" );
document.write( "payment will be made at the end of each month.\r<BR>\n" );
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document.write( "you make your inputs and click on payment (pmt) and the calculator tells you that the monthly payment needs to be $220.19<BR>\n" );
document.write( "this is shown as negative because it's money that you need to spend at the end of each month for the next 40 years so that you will have $611,460.42 at the end of the investment period.\r<BR>\n" );
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document.write( "to summarize:\r<BR>\n" );
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document.write( "you invest $220.19 at the end of each month for the next 40 years.<BR>\n" );
document.write( "at the end of that 40 years investment period, you will have $611,460.42.<BR>\n" );
document.write( "you will invest this into a fund that will provide you with $4400 at the end  of each month for the next 25 years after you retire.\r<BR>\n" );
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document.write( "i believe the solution to your problem is that you need to have a nest egg of $611,460.42  at the time that you retire.\r<BR>\n" );
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document.write( "any questions, write to dtheophilis@mail.com.\r<BR>\n" );
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document.write( "here are the results of using the online TVM calculator to solve your problem.\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2019/041901.jpg\" alt=\"$$$\" >\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2019/041902.jpg\" alt=\"$$$\" >\r<BR>\n" );
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document.write( " </SPAN>\n" );
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