25 year old employed, every year they set aside a fixed sum, first sum starts end of the year, until they are 65 years old, must allow 12,000 per year starting at age 66 and continue for 25 years, you can invest 7% per annum, how much do you need to set aside to meet the objective?
+23254 A modification of the information from this site: http://www.opentextbookstore.com/mathinsociety/current/Finance.pdf
A formula that can be used is:
P = A[ 1 - (1 + r)-y ] / r
P = the beginning amount A = amount withdrawn = 12 000
r = interest rate, as a decimal = 0.07 y = number of years = 25
P = 12000[ 1 - (1 + 0.07)-25 ] / 0.07
P = 139,843.00
This assumes that the amount will be withdrawn at the end of each year.
If you want to withdraw that amount at the beginning of each year, calculate the formula for 24 years ($137,632.01) and add the first year's withdrawal (for a total of $149,632.01).
+23254 A modification of the information from this site: http://www.opentextbookstore.com/mathinsociety/current/Finance.pdf
A formula that can be used is:
P = A[ 1 - (1 + r)-y ] / r
P = the beginning amount A = amount withdrawn = 12 000
r = interest rate, as a decimal = 0.07 y = number of years = 25
P = 12000[ 1 - (1 + 0.07)-25 ] / 0.07
P = 139,843.00
This assumes that the amount will be withdrawn at the end of each year.
If you want to withdraw that amount at the beginning of each year, calculate the formula for 24 years ($137,632.01) and add the first year's withdrawal (for a total of $149,632.01).
