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2 years ago

Daryl wishes to save money to provide for his retirement. He is now 30 years old and will be

Business

1 answer:

katovenus [111]2 years ago

4 0

Answer:

The answer is $138.92

Explanation:

Solution

Given that:

Daryl today's Age = 30

The Retirement Age = 64

The Total Monthly Deposits = ( 64 - 30 ) * 12 = 408

Now,

In case of 12% Compounded Monthly , Interest Rate per month = ( 12% / 12 ) = 1%

Then,

The Effective Interest Rate per year = ( 1 + 0.12/12 )12 - 1 = 1.1268 - 1 = 0.1268 = 12.68%

So,

The Present value of Annual 25 Years withdrawal of $100,000 at time of Retirement = $100,000 * PVAF ( 12.68% , 25 )

= $100,000 * 7.4864

= $748,642.20

The Present Value of Money for nephew at time of Retirement = $1,000,000 * PVF ( 12.68% , 25 )

= $1,000,000 * 0.050535

= $50,534.52

Now

The Present Value of total Amount Required at time of Retirement = $748,642.20 + $50,534.52

= $799,176.70

Now

The monthly deposit be X

Which is,

= X * FVAF ( 408 , 1% ) = $799,176.70

= X * 5752.85 = $799,176.70

X = $138.918

Therefore, Monthly Deposit for his retirement plan is = $138.92

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