SOLUTION: Mike plans to make contributions to his retirement account for 15 years. After the
last contribution, he will start withdrawing $10,000 a quarter for 10 years. Assuming
Mike's
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last contribution, he will start withdrawing $10,000 a quarter for 10 years. Assuming
Mike's
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Question 1188621: Mike plans to make contributions to his retirement account for 15 years. After the
last contribution, he will start withdrawing $10,000 a quarter for 10 years. Assuming
Mike's account earns 8% compounded quarterly, how large must his quarterly
contributions be during the first 15 years, in order to accomplish his goal?
You can put this solution on YOUR website! first display shows getting the present value of 10,000 quarterly payments for 10 years (40 quarters).
the present value was equal to 273,554.79.
second display shows getting the quarterly payment for a future value of 273,554.79 for 15 years (60 quarters).
the payment at the end of each quarter was 2398.52.
the third display shows the first quarterly time periods for investing of 2398.52 at the end of each quarters.
the fourth display shows the last quarterly time periods for investing of 2398. 52 at the end of each quarter and the first quarterly time periods for withdrawing 10,000 at the end of each quarter for 10 years (40 quarters).
273,554.79 was the future value of the investment period and the present value of the withdrawal period.
the fifth display shows the last quarterly time periods for withdrawing of 10,000 at the end of each quarter for 10 years (40 timeperiods).
investment period was time period 1 to 60.
withdrawal period was time period 61 to 100.
interest rate per time period was 8% per year / 4 = 2% per quarter.
time periods were years * 4 quarters per year.
in the investment time period, the remaining balance in the current time period was equal to 1.02 * the remaining balance in the previous time period plus a quarterly payment of 2398.52.
in the withdrawal period, the remaining balance in the current time period was equal to the remaining balance in the previous time period * 1.02 minus a quarterly withdrawal of 10,000.
