Question:
1. Please help with the below Annuity Retirement questions:
A) If you deposited the following amount per month (letters in your last name which is 10 X $80) from your paycheck from the time you graduate from school until you retire (at age 75) and your employer contributed an extra 6%, how much wealth would you have accumulated? (Be sure to include your age when you graduate). The annual interest rate you will earn should be = letters in your first name which is 10 X 1.10%.
Note: I tried using the Ordinary growing annuity and getting FV $ 74,064,421.04. Not sure it’s correct ?
B) Based on your final answers to A above, what would your retirement income be once you retired if you
a) Earned 5.5% and only lived off the earnings (did not draw down the principle-every month you took out the interest and left the initial amount to earn the same amount of interest-think simple interest)
Note: Confused when try to use the Simple interest formula PV = PV + (pv * r * n). What should be ‘n’ value as also PV?
b) Earned 5.5% and created an annuity to last until you were 90 years old (this means that by age 90 your balance should be equal to zero).
Note: Not clear whether to calculate from 75 years to 90 years keeping 75 years FV value as PV ???
Thanks..
