Question 1200837: a) Carter expects to live for 30 years more after his retirement. He would like to withdraw
$120,000 every year from his investment account (Account A) to pay for his living
expenses. Carter’s investment account (Account A) pays 5% interest per year.
How much money (a lump-sum) will Carter required to deposit in Account A at the beginning
of his retirement (at age 60) to pay for his living expenses if
(i) Account A start to pay interest one year after his retirement? (5 marks)
(ii) Account A start to pay interest on the day of his retirement? (5 marks)
[Hint: The total deposit that Carter made at the beginning of his retirement in Account A should
be the same as the amount required to provide for the monthly living expenses during his
retirement years.]
Continued with part (aii). Suppose Carter has just had his 35th birthday today and decided
to begin his retirement (exactly) 25 years from now, at his age of 60.
To ensure having sufficient funds to meet his goal, Carter plans to start depositing a fixed
amount at the end of every month to a retirement savings account (Account B) that pays
an interest of 12%, compounded monthly. The first deposit will be made today (on his 35th
birthday) and the last on his 58th birthday.
(i) Compute the size of the monthly deposit into Account B that will allow Carter to meet
the financial goal of his retirement. (8 marks)
(ii) If Carter is going to make one single (lump-sum) deposit into Account B on his 40th
birthday instead, how much will that be for him to achieve the goal? (2 marks)
Answer by ikleyn(52756)   (Show Source):
You can put this solution on YOUR website! .
As I see from this post /(and from a series of other posts), somebody wants to harness the tutors,
in order for they plow for him (or for her), performing his (or her) job.
It is a bad way to use the tutors' intellectual power.
We, the tutors, are here to teach you; not to perform your job.
Think about it.
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