Financial Management

35. You ar saving for retirement. To live comfortably, you decide you willing tug out to tho $2 one million million by the beat you be 65. Today is your 30th natal day, and you decide, starting today and continuing on every birthday up to and including your 65th birthday, that you will raiment the same amount into a savings account. If the interest handbill is 5%, how much must you constitute aside each(prenominal)(prenominal) family to make sure that you will have $2 million in the account on your 65th birthday? A growing perpetuity is a stream of cash in flows that occur at regular intervals and grow at a constant rate forever. For this example, we are not allowing it to grow forever, unless the heading is to start withdrawing from the fund upon retirement which is assumed to be aft(prenominal) age 65. In a growing annuity, the start defrayment will be designated by a C and will have a growth rate of g with dominion C x (1 + g) for the second p ayment, C x (1 + g)2 for the trio payment, C x (1 + g)3 for the fourth payment, etc (Berk, 2007). There are several(prenominal) components provided from this example. They are the total amount that you want to save by age 65 which is $2 million, how old you soon are on this birthday, which is 30 years of age, and every bills invested will turn over a return of 5%.

The time period or tot of periods or payments to be make during your lifetime is 36. This croup be arrived at by adding the number of years crossways the time line downstairs: 1 + 4 + 5 + 5 + 5 + 5 + 5 + 5 +1 = 36. The last payment that is made on your 65th birthday will not earn! any interest. The missing info that must be found is the payment amount for the 36 payments that need to be made on an annual reason in order to reach the remnant of $2 million. The PMT juncture was used in Excel to suss out the amount of monthly payments. The PV and PMT input sections were left blank within the formula below since they are unknown. The amount that you must set aside each year is $20,868.91 to ensure that you reach the coating of $2...If you want to get a full essay, order it on our website: BestEssayCheap.com

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