Question

Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he…

Excel Online template Saved File Home Insert Data Review View Tell me what you want to do Comments 二鹊 Sort&Filter s-% 9 %9 Formatting as Table Conditional Format Insert Delete Format Find &Select UndoClipboard B11 3 Retirement income today 4 Years to retirement 5 Years of retirement 6 Inflation rate 7 Savings 8 Rate of retum $50,000 10 25 4.00% $205,000 7.00% 0 Calculate value of savings in 10 years Formulas 11 Savings att 10 12 3 Calculate value of fixed retirement income in 10 years 14 Retirement income at t 10 15 Calculate value of 25 beginning-of-year retirement 16 payments at t 10: 17 Retirement payments att 10 18 19 20 Calculate net amount needed at Value of retirement payments 10 Sheet1 Help Improve Office
Retirement payments at t10 18 19 Calculate net amount needed att 10: 20 Value of retirement payments 21 Value of savings #NIA #N/A #N/A Net amount needed 23 24 Calculate annual savings needed for next 10 years 25 Annual savings needed for retirement 26 27 28 Sheet1 Help Improve Office

Solutions

Expert Solution
Value of savings in Years = 205000*1.07^10 = $   4,03,266.03
Value of
fixed return income in 10 years = 50000*1.04^10 =
$       74,012.21
Value of
25 beginning of year retirement income =
74012.21*1.07*(1.07^25-1)/(0.07*1.07^25) =
$   9,22,882.97
Net amount needed:
Value of retirement payments $   9,22,882.97
Value of savings $   4,03,266.03
Net amount needed $   5,19,616.94
Annual
savings needed for next 10 years = 519616.94*0.07/(1.07^10-1)
=
$       37,608.58


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