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A young couple, both age 25, are planning to retire in 40 years at age 65. After they retire, they expect to live for an additional 20 years, until...

A young couple, both age 25, are planning to retire in 40 years at age 65. After they retire, they expect to live for an additional 20 years, until age 85. While saving for retirement, they expect to earn 8% per year, compounded annually. They expect to earn 5% on their retirement savings after they retire.

  1. If they begin saving $5,000 per year for the next 40 years and earn an 8% per year compounded annually, how much will this couple have saved in their retirement account at age 65?
  2. How much will this couple have saved at age 65, if their 8% return is compounded quarterly?
  3. Using the answer from question 1, this couple expects to earn 5% on their retirement funds beginning at age 65. If they live for another 20 years, how much can they withdraw each year, if they decide to spend all their retirement savings?
  4. Using the answer from question #1, this couple expects to earn 5% on their retirement funds beginning at age 65. If they live for another 20 years, how much can they withdraw each year, if they decide to leave $200,000 in their retirement account for their heirs?

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