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Homework answers / question archive / Suppose you are planning to start investing in retirement fund with equal payments one year from today

Suppose you are planning to start investing in retirement fund with equal payments one year from today

Finance

Suppose you are planning to start investing in retirement fund with equal payments one year from today. Suppose that you plan to make your last payment 18 years from today and start to recieve annual payments 19 years later. If you plan to recieve annual payments of $85,000 dollars each year for a total of 13 years how much should you invest each year using interest rate of 10%?

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Use PV function in EXCEL to find the retirement fund

=PV(rate,nper,pmt,fv,type)

rate=10%, nper=13 years, pmt=85000;fv=0

=PV(10%,13,85000,0,0)=603785.28

Use PMT function in EXCEL to find the deposits made at each year

=PMT(rate,nper,pv,fv,type)

rate=10%,nper=18 years, pv=0, fv=603785.28

=PMT(10%,18,0,603785.28,0)=13,241.15

The annual deposit=$13,241.15

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