Microsoft Word – 3445 Online Assignment 1.doc
- Mrs. Reznik, who 27 years old, plans to retire at the age of 55. She is expecting a lumpsum amount (an inheritance) of $75,000 when she is 40. This lumpsum amount will be invested at 8% per year. a. Mrs. Reznik would like to be able to withdraw $120,000 per year from her retirement account for 45 years after retirement beginning a year after her retirement. How much does she need to have in her retirement account by retirement date if the interest rate is 7% per year during the post-retirement years?
- b. Suppose she already has $45,000 in her retirement investment account that earns 7.5% per year. What will be the value of this amount by her retirement date?
- c. Given her goal in 2a above and the investment she already has in 2b in addition to her expected inheritance, how much does she need to invest per year (at 9% annual rate of return) beginning a year from now till retirement, in order to reach her retirement goal?
