Determining time value of money

Reference no: EM13115377

You just turned 25. you plan on saving a equal amount in your 401K at the of each year for 40 years (your 65th birthday). You expect to earn 9% pa during this time frame. at 65 you will begin drawing down on this account $75,000 annually. You expect to live to be 90 years old (25 years). You earn 5% on the account during your retirement years. Note: you expect your timing to be "perfect" (the money runs out on your 90th birthday).

Question: How much do you need to save annually between 25& 65?

Question: How much will you need on hand at 65 to cover the $75,000 annuity payment for 25 years?

Calculate How much (pv) you need at 65 to pay 75k for 25 years? Figure what you have to save for 40 years to get to that balance (FV).

Reference no: EM13115377

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