Bailee works approximately 60 hours each week as an account executive with an advertising agency and rarely has time to shop. Sh
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Answer:
(a) The amount you need in your retirement account the day yo retire is $581,773.42.
(b) If you take the first withdrawal the day you retire, the amount needed is $669,039.44.
Explanation:
This problem is a case of annuity (n = 25 years).
They plan to withdraw $ 90,000 annually from the end of the first year of retirement.
The formula that relates capital in the account to annual withdrawals is
If your first withdrawal will be made the day you retire, you can calculate the amount of money in your account as the amount calculated before ($581,773.42) and multiplying it by (1+i)=1.15.
This is because all withdrawals are being advanced in one year, so the current value would be C '= C * (1 + i). Then we have: